October PP, PE trade stuck between devaluation and FX shortage in Egypt
Saudi major’s October offers roll over
A Saudi major’s initial PP and PE offers rolled over from September levels and were last assessed at $1150-1160/ton for HDPE film, $1140-1160/ton for LLDPE C4 film, $1170-1180/ton for HDPE inj. and b/m, $1300-1330/ton for LDPE film, $1050-1060/ton for PPH raffia and injection, $1090-1100/ton for PPH fibre and film, $1190-1220/ton for PPBC inj. and $1270-1320/ton for PPRC inj., all CIF, 90 days deferred payment.
“Players are showing limited interest towards imported materials due to an ongoing USD shortage. As a result, import activities remain hampered and players continue to purchase –albeit hand-to-mouth– local materials," a trader reported.
Mid-Eastern producer leaves offers unchanged
Offers from another Middle Eastern producer were largely stable over last month, with new levels assessed at $1130-1150/ton for HDPE grades and LLDPE C4 film, and $1350/ton for LDPE film, all CIF, 90 days deferred payment.
The producer cited the impact of the EGP devaluation and FX movements and added: "Allocations are at normal levels but trading activities are almost muted”.
Chinese PP not competitive anymore
Meanwhile, new offers for Chinese-origin PP raffia and injection, and PP fibre and film were higher by around $80-100/ton over last month at $1000-1030/ton ($1050-1081/ton including 5% customs duty) and $1050-1080/ton ($1103-1134/ton including 5% customs duty), respectively.
This stood in stark contrast with the previous levels for the Chinese-origin, which usually stood out as the more competitive alternative to Middle Eastern materials.
Inflation runs rampant in Egypt
Inflation in urban parts of Egypt accelerated to the fastest in almost four years as a direct result of higher costs after consecutive declines in the Egyptian pound. The country’s local currency has been weakening steadily and recently hit a record low in the offshore market.
Demand likely to stay pressured
Amid rising costs and further deterioration in demand, end-manufacturers have been running their plants at reduced rates. According to players, appetite for imported materials are likely to remain limited over the near-term as the import of goods into Egypt is still challenging for most traders in the country. In addition to problems with import procedures, expectations of seeing bigger swings in the pound ahead of a deal with IMF and an FX shortage are among key factors clouding the outlook.
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