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Egypt’s import PE market up on tight supply, domestic offers follow suit

by Başak Ceylan - bceylan@chemorbis.com
  • 06/10/2020 (04:09)
October brought notable increases for import PE prices in Egypt, largely as result of tightening supplies from both the US and the Middle Eastern suppliers. These increases in import prices prompted domestic producers to follow suit, resulting in EGP600-1000/ton ($38-64/ton) hikes over last month.

Saudi major’s LDPE offers up by $120-140/t

A major Saudi producer’s HDPE film offers were higher by $70-80/ton while LLDPE C4 film offers increased by $50/ton over September. However, the largest increases were reserved for LDPE film offers, which surged by $120-140/ton from last month.

According to market players, tight availability has been a key factor in determining the price direction this month. In addition to tighter supplies, a change in Egypt’s customs duties on certain grades has also helped the Middle Eastern suppliers to gain an upper hand in pricing.

New customs duties on LLDPE C4 film imports

On September 17, Egypt’s Ministry of Finance announced increasing customs duties for linear low density polyethylene (LLDPE) to 5% to encourage local manufacturing. As countries with special trade agreements were exempt from these new tariffs, non-Arab materials, such as the US and Asian, faced the possibility of losing their competitive edge.

US suppliers revise allocations amid squeezed margins

This loss of competitiveness became evident in the US PE pricing policies. The latest reported levels indicated increases of $85-95/ton for all three PE grades as compared to early mid-September levels. A US PE distributor affirmed that they were no longer competitive against their Middle Eastern counterparts, especially for LLDPE C4 film grades. Customs duties for HDPE film of US origin were already at a 5% rate. The US PE suppliers were also reported to have been revising their allocations to Egypt lower, in view of potentially better netbacks in other export markets.

Interest for local materials boosted

Domestic producers started October on a likewise firm footing. Amid a globally firming trend for PE offers, both SIDPEC and ETHYDCO opted for increases this month. The amount increases ranged between EGP600/ton ($37/ton) and EGP1000/ton ($64/ton), depending on the availability. A source close to ETHYDCO was positive that the recent increases would find acceptance among buyers, considering the squeezed availability. The source also highlighted the aforementioned change in customs duties, saying that this generated an increase in demand for their local materials.

A source from SIDPEC also mentioned seeing better demand from the local market. The source also added that they were prioritizing their domestic customers in terms of allocations over export markets this month.

How did demand pan out?

Although negotiations for deals are yet to begin in earnest, most players think that heavy discounts are unlikely amid the ongoing tightness. The extent of the recovery in overall demand is still slower than expected. However, it should be noted that domestic demand has broadly improved over September.
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