Egyptian buyers unhappy with new protection fees on homo-PP imports

The Egyptian government implemented a protection fee of 15% on all homo-PP imports effective for 200 days from June 5 to December 22, 2012, as per ChemOrbis. Egyptian PP producer EPPC pointed to strong competition from lower priced import cargoes as support for the new measures, but buyers have expressed anger regarding the new protection measures, which they feel to be unjustified. Egypt’s Chamber of Industry has also protested the new protection fees, arguing that the new measures will hamper the country’s export trade in finished plastic products while adding that EPPC’s production is not large enough to satisfy the market’s needs. EPPC is the only PP producer currently active in the country as OPC’s 160,000 tpa PP plant has been offline since November 2011. “We had purchased some import PP cargoes before the implementation of the new fees and will need to pay the tax when our cargoes arrive. We are hopeful that our suppliers will agree to some discounts on their prices to help us cope with the new taxes,” a trader based in Cairo reported. An Egyptian distributor reported seeing firmer prices after the implementation of the protection fee, saying, “The offers we received for locally-held materials jumped EGP200-300/ton (US$33-50/ton) at the end of last week after the protection fees went into effect. We expect to see higher prices in the days ahead as the new measures are likely to result in tighter supply for PP.” A converter manufacturing injection products told ChemOrbis, “We feel that the new protection fees will be harmful for the market and are not happy with the new regulations. We can substitute HDPE injection for homo-PP injection in our manufacturing process if the new taxes push PP injection to uncompetitive levels.” A plastic pipe manufacturer stated, “We are not happy with the new protection fees and are angry that a local producer has pressured the government to implement this measure. We had previously purchased some import PP from a Middle Eastern producer but we are now thinking of cancelling our orders. We will try to wait out this new measure in the hope that it will not be renewed as we can operate our plant for around 200 days without sourcing any additional PP cargoes.” Another converter added, “We have some material sitting at the port but we are not willing to clear this material through customs following the implementation of the new tax. We have filed a complaint with the authorities as we feel that there is no rational reason to apply protection fees as EPPC had been offering below the prevailing import levels before the tax was implemented.”