Egypt’s local HDPE market carries premium over SIDPEC’s prices
SIDPEC had halted their operations in the last week of March very briefly, for around 24 hours. This shutdown stemmed from the fact that the producer was not able to obtain the necessary ethane gas feedstock supplies from their gas supplier. However, shortly after the shutdown, SIDPEC resumed their HDPE film and blow moulding operations while they started to deliver HDPE blow moulding to the market from their film/blow moulding swing line. Nevertheless, the producer’s HDPE injection remained off line and they were not able to deliver any injection cargoes to the market given their lack of stocks for this particular product.
Early last week, a source from the producer commented, “We are currently running our plant at 50% capacity since we are still not able to obtain sufficient ethane gas supplies in order to be able to produce at full capacity. At the moment, our priority is to meet our contractual obligations and then, maybe around mid-April, we might start exporting. However, this decision is still not set.”
Following SIDPEC’s April price hikes and their brief shutdown, local market levels, which were already supported by the depreciating EGP against the US dollar, recorded further increases. During this past week, distributors’ locally held HDPE film prices recorded EGP300-500/ton ($34-56/ton) increases, HDPE blow moulding gained EGP400/ton ($45/ton) and HDPE injection moved up by EGP200-800/ton ($23-90/ton).
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Although locally held HDPE injection prices carry a rather smaller premium of around $10-30/ton over SIDPEC’s injection prices, locally held HDPE film offers’ premium stands at $70-150/ton and HDPE blow moulding offers’ premium stands at $55-130/ton when compared to SIDPEC’s prices.
A distributor operating in Cairo commented, “Overall polymer demand started to retreat as of last week given the relentlessly increasing prices on a week over week basis. Although buyers are reluctant to make fresh purchases, supply levels appear very tight in the distribution market, both for the locally held cargoes and SIDPEC’s materials. This situation continues to keep the market levels firm despite the limited number of inquiries.”
A trader commented on the local market saying, “The distribution market has recorded consecutive increases, but buyers appear reluctant to accept these higher levels without negotiating them down. However, the increasing dollar exchange rate pulls up the prices for the locally held cargoes while further increases are expected. Therefore, we think that buyers will have to cope with the new higher price levels as the month proceeds so, it is better for them to secure some cargoes before further hikes.”
A film products converter, who underlined the slow buying interest, confirmed tight supplies. “If demand picks up in line with the approaching Ramadan, we anticipate further increases in the market,” he further added.
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