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Oil price drop and Ebola hits used clothing exporters

Members of the textiles recycling industry have expressed concern that a significant fall in global oil prices, political troubles in west Africa and the ebola outbreak are damaging exporters of used clothing to the region.

This month it was widely reported that the Brent crude oil price fell below $50 a barrel for the first time since May 2009.

Key players in the textile recycling industry have confirmed that the currencies of African economies, some of which rely heavily on oil, have been hit by the low price. They said the prices of most other commodities are affected by it, including that of used clothing.

Martin Wilcox, director of JMP Wilcox, which exports materials to Africa, told MRW: “We are having to reduce our container prices to west and east Africa by more than 10% to encourage those countries to continue buying.”

Phil Geller, director of I&G Cohen, told MRW that payments out of Africa have become very slow due to economic pressures in the region. He said this puts more pressure on cash flow when materials stocks are high in UK warehouses, especially after the Christmas season.

He added: “The market situation is deteriorating. Sales are slow. That brings a knock-on effect.”

The low oil price has had only a “small impact” on I&G Cohen but it takes time for the impact to “trickle through”.

The flow of shipping containers has also been disrupted by the outbreak of ebola in west Africa.

Ross Barry, director of textile recycling company LMB, told MRW that aid containers get priority at ports, which results in containers tending to “stack up”. This further delays the payment process, putting pressure on the UK companies in their payments of charities, councils and waste collectors.

He added: “Cash-flow is really affecting everyone.”

Geller said: “We’ve had a container which was delayed for an extra four weeks because it had docked into Sierra Leone, which was vulnerable [to ebola], and so it had to be sent back.

“It can take two or three months for a customer to receive goods and put them in the African market. Add another a month to that and it further delays the process.”

Industry members cited the following factors as affecting companies exporting recycled clothing to Africa:

  • Drop in oil price
  • Devaluation of currencies against strong sterling
  • The outbreak of ebola
  • Spread of terrorist groups hindering trade in certain nations
  • Rising sales of Chinese clothes into market

Wilcox said that, if the oil price continues to decline, used clothing could become a low-value commodity or even become “a zero-priced rebate stream”.

While buying prices have declined by 50% in the past 18 months, they could fall by a further 50% during the coming year, he said.

In October last year, Textile Recycling Association director Alan Wheeler told the Bureau of International Recycling that the value of used clothing in the UK had fallen 40% in the past 12 months. He added: “Confidence in the market has dissipated.

Nigerian and Russian buying power down

Brendan O’Brien, managing director of UK textile recycler Nathan’s Wastesavers, told MRW: “The concern now is that our biggest market is Nigeria. The lowering oil price is weakening buying power for people on the street and it is starting to weaken demand for our clothing.

“It’s the same sort of problem in Russia. The Russian situation is pretty serious for all exporters.

“A lot of material from the UK has historically gone to Poland and Ukraine, and from Ukraine it then goes into Russia, but the demand has dried up. They just don’t have money to spend.”

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