Weak Indian rupee prompts exports of polymers, solvents

27 June 2013 13:39  [Source: ICIS news]

Weak Indian rupee prompts polymer, solvents exportsLONDON (ICIS)--The weakness of the Indian rupee against the US dollar is encouraging Indian producers to export volumes to other regions, which in turn is increasing competition elsewhere, participants in both the African polymers and European solvents markets said this week.

Many Middle East-based producers of polyethylene (PE) and polypropylene (PP) for the African markets are attempting to push through price hikes in July.

However, this is proving particularly difficult in east Africa because of the increased competition from Indian producers selling at lower prices.

A homopolymer raffia producer said: “There’s more competition [among producers] for east Africa, particularly India.”

We are keeping [African PE/PP] prices stable,” another Middle East producer said, adding that the main factor is the depreciation of the Indian currency, which is encouraging exports from India and increasing competition for the African markets.

A PE/PP distributor based in Africa said: “The Indian currency has devalued so much, they’re reluctant to import. [Indian] Producers are agressive in their interest to export from India, to get more dollars.”

On Thursday a European producer of ethyl acetate spoke of strong competition in the market, particularly from India.

“Prices are low, nobody is earning money,” the source said. “There are lots of imports from India.”

The producer added that it is very difficult to compete as Indian volumes are priced so low.

An Indian producer of ethyl acetate said: “[European] Buyers want below $900/tonne FOB [free on board]. We reduced export [prices] a little bit because of the Rupee weakening.”

The source added that it is currently financially better to export ethanol and ethyl acetate than to sell the former locally for transportation fuel.

The source said it did not think the rupee would devalue further.

“If the Rupee starts strengthening, this [export] price won't be attractive for us,” the source said.

On Thursday, $1 was equal to 60.27 Indian rupees.

By: Jo Pitches
+44 208 652 3214

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