Weak activities press import PE, PP suppliers for discounts in Egypt

Import PE and PP markets in Egypt started off 2023 with price concessions from suppliers, largely due to tough resistance towards price increase attempts amid weakened activities. Major Middle Eastern producers either rolled over or decreased their offers for PE grades while PP offers for January were down by more than 5% on average from last week.

Mid-Eastern producers cut January offers

Accordingly, a Middle Eastern producer’s new PE offers for January mostly rolled over from December while another Middle Eastern, who had initially announced $60-140/ton price increases, gave in to growing resistance among buyers and trimmed their offers late last week. Meanwhile, a major Saudi producer’s PE offers rolled over or decreases by as much as $70/ton, and their PP offers saw noticeable decreases of $40-130/ton as compared to December.

USD shortage continues to weigh heavily on activities

Most players agreed that the recent offers in the import market were largely in line with the weakened state of demand. Although importing materials are expected to get easier after the Egyptian central bank’s decision to scrap letters of credit requirement, the problem with securing US dollars to pay for the imports remains.

“Several producers retracted their initial offers and substituted for lower levels. They face heightened competition as most buyers prefer the local market due to USD shortage. However, imported materials are unlikely to gather buying interest unless this persistent shortage of foreign currency eases,” a trader reported.

EGP stabilizes after 3 devaluations in less than a year

The Egyptian pound plunged as much as 14% to trade at 32.2 against the US dollar last week. The slump came after Egyptian authorities agreed on a shift to flexible exchange rate as part of an IMF deal to help alleviate a year-long foreign currency shortage. The pound has lost nearly 35% as the central allowed it to devalue in phases in almost a year.

However, economists believe that the end of the devaluation process may be nearing an end as the gap with prices quoted in the black market and the official market narrowed down significantly following the latest slump. The currency was trading 29.5-29.6 to USD at the time of writing.