Whether its pizza or wine boxes or industrial fibre sacks for flour or handyman cement and concrete, Australia’s imports of fully converted packaging materials are on the rise.
The openness of the Australian economy makes that unsurprising at a macro level. Australia is an easy country with which to trade.
Real interest comes from the sources of the fully converted products.
No one can be surprised that the majority of Australia’s imports of already converted fibre packaging come from Asia and largely from China. Lower manufacturing costs and economies of scale make that an inevitably.
What is surprising is the increasing quantity of some fibre packaging products imported from higher cost economies.
Attention turned to industrial bags and sacks in recent months due to a large increase in imports in December Quarter 2013.
Analysis shows that along with traditional supplies, the tiny previous quantities from Italy spiked 525.0%. What is more, the Australian dollar price of these imports fell 26.0% compared with the previous quarter’s small volume of imports from Italy.
What is more, the trade weighted average price for all imports of converted sacks in the December quarter was 23.9% higher than the average price of the imports from Italy. The average price of imports from China was higher than the average Italian price.
Because the Australian dollar depreciated against the US dollar and the Euro over this period, the price will have been even lower for the producer, in either US dollars or Euros.
There will be immediate suspicion that dumping has occurred, with the Italian product being imported to Australia at below the cost of manufacture or with some other anti-competitive measure in place. That is possible, but just as likely is that aspects of the Italian economy (as with several European countries) are so embattled, they have otherwise unsaleable over-supply.
Research by IndustryEdge shows that the cheap Italian imports are being used for flour sacks and some handyman supplies.
The question for the end-user of the unsustainably cheap imports must be what they are going to do when the European economic recovery really takes hold and the supplies dry up? Short-term ‘cheap’ can quickly become long-term supply problem.
Read the full analysis in the attachment and contact us if you are interested in further information.
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