Euro at 4 year lows: global polymer markets impacted

Europe’s sovereign debt problems have pulled down the euro to a four-year low at 1.2144 vs the US dollar as analysts are concerned over a sustained fall in the coming months given the economic turmoil that hit the region, as per Chemorbis. The key issues prompting the euro’s fall were the mounting debt problems faced by Greece that will spread to other nations in the region, particularly to Spain and Portugal. After the US$1 trillion rescue package the European Union launched last week to ease the prevailing concerns and halt the fall in the euro had a very short term impact on markets, European finance ministers prepared to discuss tighter regulation this week, requiring further austerity measures in government spending to help the nations in crisis close their budget gaps. However, this is expected to stifle economic growth and increase unemployment in the region. Few players feel that the new cuts in spending may push the region back into recession, eliciting a continued fall in the euro. The plunge in the euro has impacted global polymer markets this week. Concerns abound that Europe’s financial problems could restrict finished product orders for goods produced in China and Southeast Asia for packaging, automotive, building and construction materials, toy and electrical appliances. This outlook, amid plunging crude oil prices, has pushed buyers to the sidelines in Asia. Asian markets saw West European PVC offers appear mid-week in India - low end offers were US$10-40/ton below Taiwanese offers and US$30-40/ton below offers from South Korea. Generally, in the Mediterranean markets, the euro based offers made to Turkey come to a competitive position for PP, PS and HDPE, while European PVC has been the most competitive for the past couple of months due to oversupply in the region – a lower euro is prolonging that trend. In the case of PP, offers from South Europe are now below non-European prices even before taking into account the 3% customs duties on the non-European origins. Some PS sellers are even considering further hikes for European PS since they lost money in dollar terms with their euro based offers amid ongoing tightness. In the PVC market a wide variety of European offers continue to be reported, while a trader who earlier purchased European PVC k70 on euro terms reported cutting his offers in dollar terms recently due to the stagnant market conditions, benefiting from the lower parity. In the HDPE market, despite a whopping €75/ton increase from a Central European producer, the new offers are now below non-European prices before taking into account the customs duties, similar to the situation in PP. In Egypt a buyer received a Central European PP random block copolymer offer from a trader with $40/ton discounts, which he attributed to the lower euro/dollar parity and slow demand. At the same time, a trader who had earlier sold out his South European LDPE cargoes was granted an additional allocation to sell to Egypt and sold out again this week. Though supplies are reported to be extremely tight in Europe for this product, the favorable parity made his sales terms attractive enough to compete against the market level in Europe. The impact of the sharp decrease of the euro vs the dollar are also visible In the Italian market. The country’s HDPE and PP markets had opened the door to imports a short time ago since spot prices were on the rise, spurred by tight supplies. After the emergence of some competitively priced import cargoes a couple of weeks ago, some buyers are still maintaining their hopes of finding competitive prices again. However, as a result of the remarkable appreciation of the dollar against the euro, import offers to Italy are unlikely to provide workable options to regional buyers.
  More News  Post Your Comment
{{comment.Name}} made a post.




There are no comments to display. Be the first one to comment!


Name Required.


Email Id Required.

Email Id Not Valid.


Mobile Required.

Email ID and Mobile Number are kept private and will not be shown publicly.

Message Required.

Click to Change image  Refresh Captcha