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Egypt devalues pound again; local polymer markets rise

by ChemOrbis Editorial Team -
  • 26/10/2015 (04:04)
The Central Bank of Egypt’s (CBE) most recent decision to devalue the Egyptian pound for the second time in a week on October 18 took its toll in the distribution market, pushing prices for locally held imports higher. Following the devaluation, the dollar broke above the EGP 8 threshold in banks and exchange companies for the first time while rising to EGP 8.40 on the black market.

Distributors, in a bid to avoid losses on their locally held materials, which were previously purchased on dollar terms, lifted their sprices. Apart from this factor, supply was already limited in the distribution market due to hindered import purchases. The high USD parity against the EGP coupled with ongoing difficulties when trying to open letters of credit at banks and lessening US dollar availability in the market have been pushing buyers away from the import markets for a while. Plus, recent customs regulations also added to the problem since players now have pay more fees and they have to wait for longer when trying to withdraw their cargoes from the ports.

As a result of these developments, locally held availability has lessened further and offers moved up significantly during this past week. In the PE market, increases reached up to EGP800/ton ($102/ton) while PP increases were up to EGP700/ton ($89/ton). Locally held PS markets also rose as GPPS prices gained up to EGP700/ton ($89/ton) and HIPS prices gained up to EGP500/ton ($64/ton). Distributors’ locally held PET prices broke above the EGP10000/ton threshold again as they recorded increases of around EGP700/ton ($89/ton).

To track weekly developments in Egypt’s PP market, please see Egypt Weekly PP Analysis (For members only)

A film products converter reported, “ Locally held supplies are limited and prices are rising on the back of the depreciating local currency against the American dollar. We do not see an encouraging end product demand and we continue to purchase on a hand-to-mouth basis.”

“Limited local supplies and the higher dollar parity pushed up prices in the distribution market. The low end of the ranges mostly disappeared towards the end of last week. Since supply issues are not likely to be resolved quickly and the American dollar is on the rise, we anticipate further increases this week,” commented another buyer.

To track weekly developments in Egypt’s PE market, please see Egypt Weekly PE Analysis (For members only)

According to some analysts, the dollar’s price is likely increase to EGP 8.25 against the Egyptian pound within three months and to EGP 8.5 by the end of the first half of 2016.

Apart from limited local supplies, some players point to limited availability from the local PP and HDPE producers as another factor pushing prices higher. A raffia products converter reported, “Supplies are very limited in the local market and we believe that offer levels are subject to further hikes due to the recent dollar party increases. Meanwhile, OPC’s quotas are also limited as they mostly export their cargoes.”

In the PE market, source from the local HDPE producer SIDPEC confirmed not having any HDPE film quotas at the moment. “For HDPE film, we held good stocks, but thanks to our strong sales, we have now run out of this particular product. At the moment, our HDPE film and b/m switch line produces only HDPE blow moulding and that is why players feel the shortage for HDPE film. We believe that there would have been no tightness felt if locally held availability had not been hindered by high parity issues,” a company source highlighted.
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