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A look back at Egypt’s PP, PE markets in 2021: Record peaks and troughs amid shifting dynamics

by Başak Ceylan - bceylan@chemorbis.com
  • 14/12/2021 (02:42)
Polypropylene and polyethylene prices in the Egyptian markets have started to tail off following a period of sharp increases. The uptrend, which had been driven by tighter supplies and a globally bullish sentiment, snapped by mid-to-late November as global sentiment began to weaken and fragility in the sector increased.

As the market adjusts to its change of scene, we will take a look back at the events that shaped 2021.

Supply shortages bring record hikes in Q1

The first quarter of the year was characterized by severely restricted supplies. This was a result of various interlocking factors, such as overloaded transportation networks, labour shortages, as well as pent-up demand and inventory restocking.

In the midst of acute supply shortages, import PP and PE markets soared to record highs during the first quarter. April prices peaked at $1675/ton for HDPE film, $1945/ton for LDPE film, $1670/ton for LLDPE film and $2010/ton for PPH inj. and raffia grades.

However, the consecutive increases that pushed some grades to their highest-ever levels started taking a toll on buyers and a resistance grew by the end of first quarter.

Rising competition halts uptrend in May

As April drew to a close, Middle Eastern origin PP grades started facing competition from Asian rivals while import offers for PE grades met with a lukewarm interest from buyers. Also pressured by the approaching Eid al-Fitr holidays, offers came off from their sky-high levels as Middle Eastern sellers moved on to revise their offers downwards in May.

June pricing showed triple-digit drops for both PE and PP grades, following demand-driven revisions from major Middle Eastern suppliers. Although suppliers had initially targeted price increases -citing limited allocations- further drops ensued in July. These drops also encouraged demand, which had been impacted by exaggerated price levels, and allowed buyers to replenish their stocks before the Eid al-Adha. From the peak to trough, PE offers declined by %22 on average while PP grades logged a drop of %33.

PP raffia – Import Prices – Egypt – LDPE – LLDPE – HDPE

Markets make recovery of 20-25% from July to Nov

There was a shift at the start of August. Increasing feedstock and resin costs in global markets, as well tighter availability, boosted the firm sentiment among sellers. Despite slow end-product sales and persistent liquidity problems, the recovery extended well into the final quarter of the year.

According to ChemOrbis Price Index, import PP and PE prices in Egypt made a 20-25% recovery from July to November, supported by higher feedstock costs and firm pressure from producers.

Demand weighs on Dec pricing, Q1-22 outlook bearish

Although sellers tried to push through price hikes in November, signs of a growing resistance were becoming apparent among buyers. With market already brittle due to back-to-back increases, buyers started negotiating prices and revised levels were announced by mid-month.

December pricing also took direction from weak activities and buyers’ resistance. Offers from the Middle Eastern producers were at an average of $1545/ton for HDPE film, $1855/ton for LDPE film, $1700/ton for PPH raffia and inj. and $1550/ton for LLDPE C4 film as of mid-December.

With just days left in 2021, market players are wondering whether the softer pricing could extend into 2022. According to some, further discounts are likely, considering the ongoing weakness in market activities and supply exceeding demand. Although the outlook is still subject to heightened levels of uncertainty related to the Covid-19, downward price adjustments could continue through the first quarter of 2022.
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