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