Egyptian PP players question the distribution market direction
At the beginning of this week, the domestic producer EPPC cut their PP raffia prices by EGP826/ton ($109/ton) to EGP8690/ton ($1144/ton) and their fibre prices by EGP906/ton ($119/ton) to EGP8848/ton ($1165/ton) on ex-Port Said, cash not including VAT basis.
This week, players also reported more prices from Middle Eastern producers. A regional producer issued their PP and PE prices at a single level of $1100/ton on CIF Alexandria, 90 days deferred payment basis for all commodity grades. According to a buyer who received these new levels, the producer’s offers indicate $50/ton drops from last month. The producer also offers all commodity grades at $1070/ton on CIF, cash basis.
Another regional producer’s PP prices indicate even larger drops at $200/ton from last month at $1000/ton on CIF, 90 days basis, forming the low end of the overall import range in the country.
Meanwhile, a major Saudi Arabian producer issued additional decreases of $20-60/ton on their February PP prices, for which they issued initial decreases of $40-50/ton from their most recent January levels.
Despite the decreases and downward adjustments seen in the import market along with the local producer EPPC’s cut, distribution market levels tracked a rather unstable trend. PP prices, reported in limited numbers, are moving in different directions while PP film supplies were reported to be tight in the market when compared with other PP products. PP raffia prices indicate EGP300/ton ($40/ton) increases at the low end and EGP500/ton ($66/ton) drops at the high end at EGP10800-11000/ton ($1293-1317/ton without VAT) on ex-Egypt, cash inc VAT basis, so far.
Although the import market levels are lower, importers are suffering from the higher US dollar parity and refrain from importing purchases. The Egyptian pound has been recording rapid decreases against the US dollar since the end of January while this situation was prompted by the county’s central bank in an attempt to deter black market trading in foreign currencies.
This situation has caused instability in the distribution market as some distributors lack cargoes, given their disrupted import purchases amidst the steadily decreasing global trend. Meanwhile, some distributors prefer to hold onto their cargoes as they are not sure how to price their products when the Egyptian pound is rapidly decreasing against the US dollar.
As a result of the parity issues and rather limited availability, the distribution market is anticipated to maintain their levels, more or less, since distributors refrain from reflecting the full extent of the decreases seen in the import market to their own offer levels.
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