Plastic exports to Europe slump amid six-month euro slowdown

Thursday, Jul 16, 2015 08:00

Plastic pipes are transported from Tien Phong Plastic Joint Stock Company for export. Vietnamese plastic products are facing difficulties in the European market. — VNA/VNS Photo Hoang Hung

HA NOI — Plastic exports to the European market have felt the effects of the continuous decline of the euro over the past six months.

"Our profit from the European market in the first half of this year fell by 10 per cent," said director of a plastic company in Ha Noi.

He said that his company's European partners asked them to reduce their price but he couldn't due to the high cost of raw materials. Their partners then reduced orders from 5,000 tonnes of plastics to 3,000 tonnes, he added.

A representative of Nam Thai Son Import - Export Joint Stock Company, said that the downtrend of the euro affected his company because the company signed contracts with partners when one euro exchanged for US$1.3. At present, the exchange is around $1.1, causing big losses for importers who are now rescheduling orders or changing to other commodities, the representative added.

The online newspaper Vnexpress quotes Tran Viet Anh, deputy chairman of the HCM City Rubber – Plastic Manufacturers Association, saying that, beside the loss from declining orders, enterprises now have to face competitiveness from more local suppliers in Europe.

European plastic producers might be able to provide products at a competitive price since the euro is low.

To overcome the new challenges, the chairman recommended Vietnamese enterprises, apart from expanding to other markets or their market share, seek cheaper materials and make changes in product structuring to lower the price for the European market, which is vital to Viet Nam's plastic industry.

Estimates for export turnover in the plastic industry are over US$1 billion for the first half of the year. According to the association, the European market accounted for 60 - 70 per cent.

The industry saw a year-on-year increase of 10.3 per cent as turnover hit $4.2 billion for the first half of the year. The industry earned $9 billion last year.

In the larger picture, growth also depends on how Viet Nam competes with China, Japan and ASEAN countries. Exports to the European market fell across the East and South East Asia region. — VNS

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