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US PVC offers in Egypt rise steadily but resistance grows in tandem

by Başak Ceylan -
  • 23/06/2020 (04:11)
Import PVC offers started off June on a solid footing in Egypt, rebounding from May lows at a rapid pace. As suppliers seemingly race to return to pre-pandemic levels, offers have neared an $800/ton CIF Egypt threshold. However, the momentum appears to have slowed down recently as some sellers reported facing stiff resistance from buyers.

Pace of gains cools as resistance becomes evident

The pace of gains accelerated in the import market by the second week of June and offers below the $700/ton CIF level became increasingly unavailable. According to players, this was largely a result of tightening US PVC availability rather than a demand recovery and signs of increasing resistance from buyers began to surface.

Although gains were extended into last week, the pace of increases seemed to have cooled off as resistance became increasingly evident in the market. The price range moved up to $730-760/ton against much lower bids from buyers. Traders, however, remained disinclined to offer discounts as they aimed at compensating for their short sales in the previous weeks.

Wide gap between selling and buying ideas

This week’s offers have so far been within the range of $750-780/ton CIF Egypt, indicating an increase of $20/ton over last week’s levels. Even so, this seven-week streak of increases pushed import prices to stand more than 25% higher from the nadir of the downturn in late April and early May.

A player who highlighted the wide gap in buying and sell ideas said: “Some sellers pushed for $800/ton or higher, but buyers’ response was not encouraging. Few traders are offering US materials at $750/ton and offers below that are no longer available.”

Signs of demand recovery in sight

At the same time, a distributor commented on a gradual improvement in demand, which came amid reports of further easing in restrictions. Restrictions on movement and business activities are expected to ease by the end of this month, in line with plans to restart the country’s virus-hit economy.

Is there another price surge on horizon?

As for the question of whether the increases will continue, most players are leaning towards stable prices until at least the end of June. “Prices may fluctuate within the current ranges, but we see a limited upsurge potential,” a market player said. “The US suppliers are expected to hold their offers steady,” another player agreed, adding that this might also provide the market some time to absorb the recent increases.
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