Skip to content




Markets

Asia Pacific

  • Africa

  • Egypt
  • Africa
  • (Algeria, Tunisia, Libya, Morocco, Nigeria, Kenya, Tanzania, South Africa)

Filter Options
Text :
Search Criteria :
Territory/Country :
Product Group/Product :
News Type :
My Favorites:
 

Worsening dollar shortage pushes Egypt’s local PP, PE prices to never-before-seen highs

by Nada Samir - nada@chemorbis.com
  • 13/02/2024 (14:00)
Local polyolefin prices in Egypt have been on an intact upward trajectory since late December. The deepening foreign exchange crisis as well as restrained imports continued to buoy local prices despite below-average demand. ChemOrbis Price Index suggests new all-time highs for local PP and PE markets in Egypt.

Forex crisis takes center stage

In January 2023, Egypt’s pound plunged in third devaluation process in less than a year. The devaluation came after the central bank announced adopting a more flexible exchange rate regime during October 2022 as a part of a staff-level deal with the International Monetary Fund (IMF) on comprehensive economic policies and reforms to be supported by a 46-month Extended Fund Facility (EFF) Arrangement of $3 billion.
Despite its pledge in October to allow supply and demand determine exchange rates, the central bank has been managing the currency in a tight band that has remained virtually unchanged at around 30.80-30.90 per USD while the pound has recently slid to between 62 and 65 in the black market after it reached around 72 against USD 3 weeks ago.

Exacerbating economic challenges weigh on import trading

The extended foreign currency shortage in addition to the long and complicated import procedures has been a key factor in restricting import activities all through the previous year. As a result, buyers started to focus on the domestic market to secure their needs, which given distributors leverage to raise their prices despite hand-to-mouth purchases.

Super tight supplies resulted in record highs

Tight import availability has had a knock-on effect on Egypt’s polyolefin prices since late 2023. The Red Sea turmoil, which caused shipping bottlenecks and skyrocketed container prices, Saudi Arabia’s potential restriction on PP exports from local resellers, a series of planned shutdowns in the region as well as the chronic USD shortage problems led to a swift upswing in Egypt’s markets.

Local polyolefin markets have followed a series of weekly increases since late December. During this period, Egypt’s domestic PE markets have increased by up to 48% while domestic PP markets spiked by up to 68% on average, according to ChemOrbis data. They all hit their all-time highs since ChemOrbis started compiling data in 2008.

Egypt – PP – Local

Now, corrections in place as USD/EGP rally somewhat falters

By the end of the previous week, domestic PP, PE prices erased some of their previous gains and retreated from their record highs largely because of the fluctuating USD/EGP exchange. The Egyptian pound strengthened by about 25 per cent against the US dollar, reaching 55 pounds during the previous week after a low of more than 71 on parallel markets the week before. The greenback recovered part of its losses, trading at 62 on average at the time of writing. Nevertheless, Local polyolefin prices remain at all-time-highs levels.

What will Q2 unfold for Egypt polyolefin markets?

While local prices started to see downward corrections after hitting surreal levels, players project further price corrections moving into the end of Q1, as the Egyptian government is preparing to devaluate its currency for the fourth time as per the International Monetary Fund (IMF) loan programme, which requires adopting a flexible exchange rate.

However, the slump may lose some steam, traders believe, in case buyers return to meet their requirements at some point especially with the approaching month of Ramadan. “Restricted imports and the hefty increases issued by the local PE and PP producers for February are likely to keep the upward momentum even with the price corrections,” a distributor remarked.
Free Trial
Member Login