Europe R-PET export demand reduced by exchange rate volatility

04 March 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--The European recycled polyethylene terephthalate (R-PET) market is seeing reduced export demand because of volatile exchange rates, sources said on Monday.

The euro to US dollar exchange rate has become increasingly volatile since the start of 2013. This has limited exports of finished goods as overseas buyers are unwilling to purchase from Europe because of uncertainty over the true cost of materials when they land.

“Caution on exchange rates is the case. Overseas [players are] not buying because of the risk,” an R-PET pellet producer said.

The fibre and automotives industries are major end-use markets for the R-PET chain, both of which are typically heavily exported to Asia. Fibre demand has been previously estimated by R-PET players at up to 10% below January and February 2012 levels during the same periods in 2013. 

Fibre demand and exports of post-consumer bottles to Asia had been expected to rise following the end of the Lunar New Year holiday period, but this has not occurred. Exports to Asia typically have a 6-8 week lead time.

“You don't find easily opportunities to export. Yes, the exchange rate volatility is preventing any exports. If it were up to me I wouldn't take the risk,” a flake buyer and producer of finished goods said.

Volatile exchange rates have also meant that overseas buyers are unwilling to purchase post-consumer bottles from Europe because of the risk of a moving cost-base. As a result, material that would have been earmarked for export to Asia is remaining in Europe.

Nevertheless, increased captive usage of post-consumer bottles among major supermarket chains in Germany has counterbalanced the increased collection rates and lack of overseas buying interest, restricting bottle availability and keeping prices at a high level.

($1 = €0.77)

By: Mark Victory
+44 208 652 3214

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