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Egypt’s SIDPEC: Higher parity causes local PE market to move up

by ChemOrbis Editorial Team -
  • 16/02/2015 (11:45)
In Egypt, the local currency has been depreciating against the American dollar on the back of the Egyptian Central Bank’s new policies aiming to curb black market transactions. The shortage of dollar reserves has grown more acute over the last years given the economic struggles of the country amidst political unrest. Most players were turning to the black market to meet their dollar needs but the central bank recently allowed the pound to depreciate after six months of stability and gave banks a wider band around the official rate in which to trade dollars.

Early in February, the central bank put a cap on the amount of dollars that can be deposited in banks. The cap limited dollar deposits to banks to $10,000 a day and to $50,000 a month and this move had narrowed the gap between the official and unofficial rates. Some traders were reported to be selling dollars at the same rate as the central bank.

A source from Egypt’s HDPE producer SIDPEC commented, “Local market levels recorded hikes on the back of the increasing dollar parity. Most players avoid making import purchases and this situation has resulted in more players turning to the local market to meet their needs. Given improved demand and lessening import purchases, local supplies might record further increases in the days ahead due to limited supplies. At the moment, we deliver gradually to the market and we receive an increasing number of inquiries. Considering the current market circumstances, we divide our deliveries as requested on a weekly or monthly basis.”

Market players also comment that the new strategy from the central bank has created confusion amongst players while the low end of the range for locally held cargoes has vanished from the market. “Prices recorded up to EGP300/ton ($39/ton) hikes in the market so far,” said a player. With the return of buyers, who have been postponing their purchases for a while, demand has improved. Meanwhile, supplies were reported to be limited, especially for LLDPE and LDPE film.
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