Limited supplies, approaching Ramadan perk up demand in Egypt

In Egypt, players in the polymer markets report seeing an improvement in their businesses as limited locally held supplies coupled with approaching Ramadan have started to revive some buying interest amongst converters, as per ChemOrbis. However, players continue to question the sustainability of the current situation given the weak economic conditions under which the country has been suffering. Players agree that supply levels for the various polymers are very limited owing to restricted import activities. Imports into the country have been affected for some time from the higher USD/EGP dollar parity which stems from a lack of dollar reserves ever since the political turmoil resulted in the main foreign currency sources drying up, such as tourism. As a result of this situation, most players turned to the black market to meet their dollar needs at the expense of paying higher costs. Consequently, import trade has become more and more scarce and locally held polymer availability started to tighten. Meanwhile, recent shutdowns at the local PVC producer EPC and the HDPE producer SIDPEC also worsened the situation, although producers have been reported to have resumed their operations. In the PP market, the local producer EPPC has not been making offers for over two months and some players claim that the producer is not likely to offer before June. EPPC previously had commented that it was difficult to judge a fair price amidst ongoing parity issues. In the distribution market, locally held PP raffia offers gained EGP300/ton (US$43/ton), PVC k67-68 offers moved up by EGP100-330/ton (US$14-47/ton) while the PE market gained increases changing between EGP50/ton (US$7/ton) and EGP400/ton (US$57/ton) for all products during this past week. A converter remarked, “We expect to see higher PVC prices when considering the limited availability. We hear from other market participants that they are struggling to get even import quantities in the amounts they ask.” A different converter added, “Despite the fact that EPC restarted their plant they still operate below full rates and this situation continues to put further upward pressure on prices. We purchased some materials as we see slightly better end product demand but we still do not stock up in large amounts as we prefer to do back-to-back business and only cover two weeks’ worth of our raw material needs.” In the PE market, a manufacturer remarked, “Local market levels are moving up but demand is still limited to the needs. Most converters opt to add some off grade materials to their purchases in order to balance their costs. Approaching Ramadan has revived the end product markets a bit, especially for film products, but we do not expect this situation to be sustainable when considering the current economic and political conditions inside the country. Meanwhile, hike expectations from the Middle Eastern producers for June also fuel sellers to hold onto their materials.” According to ChemOrbis, a different player highlighted that the overall end product markets revived for the food packaging sector. “Demand has improved when compared to before but it might not be a long lived revival once Ramadan sets in.”