07 December 2011 12:01 [Source: ICIS news]
LONDON (ICIS)--Depreciation of the Indian rupee against the US dollar has enabled India to export cheaper homopolymer raffia grade polypropylene (PP) into Africa, market sources said on Wednesday.
The rupee had depreciated to a record low of 52.73 against the US dollar on 22 November and continues to be the worst performer among Asian currencies.
Lower Indian offers are putting pressure on import prices that are mainly offered in US dollars, industry sources in the African PP market said.
“Their prices are attractive. That is why we dropped our prices in West Africa, to not encourage them to increase their market share. Once they see there is demand, they will dump their product there,” said a Middle East producer of PP raffia.
The offers include those coming from Reliance Industries Ltd (RIL), distributors and producers that regularly export PP raffia to Africa said. The company was unavailable for comment.
“Reliance is offering everywhere. They are a big producer, and they have problems locally with the currency,” a second Middle East producer of PP raffia said.
Offers into Africa from India are at $1,420/tonne at the low end to Nigeria and Kenya this week, distributors said.
PP Raffia prices were at $1,440-1,480/tonne CFR (cost and freight) eastern and western Africa late on Wednesday 30 November.
“They are the most aggressive. They are selling raffia at $1,340/tonne to Turkey, that means raffia is being sold at $1,260-1,270/tonne FOB [free on board] Mumbai,” said a distributor.
Slow demand in the local market could also be aiding exports, the second PP raffia producer said.
Raffia is extensively used to make cement bags in India.
But unlike their lowered offers in the export market, the depreciation of the rupee has helped RIL increase its prices for three consecutive weeks for PP in the local Indian market.
Africa is a net importer of PP raffia, mainly from the Middle East and India.
($1 = Rs51.42)
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