12 December 2012 17:13 [Source: ICIS news]
LONDON (ICIS)--Polyethylene (PE) and polypropylene (PP) demand in Egypt is weakening in the uncertain political climate ahead of a referendum on Saturday on a controversial draft constitution, suppliers said on Wednesday.
"We have the vote on Saturday, the political situation is not good, we don’t know where we are going," a PE supplier based in Egypt said. "The market is changing according to the political situation. Demand is not good."
A Middle East PP producer said: "In Egypt, there are some conflicting messages because of instability in the market. There is demand, but there are some safety issues in getting things to and from the ports. Customers are hesitatnt to place more orders."
Last week, Egyptian converters had recognised no short-term impact of the political unrest on PE and PP supply and prices.
But converters had highlighted that Egypt's political uncertainty – along with potential economic debt on the back of a proposed, but delayed, $4.8bn loan from the International Monetary Fund – was unlikely to raise Egypt’s profile among foreign investors or improve the Central Bank of Egypt’s standing with banks abroad.
First, a lack of much-needed foreign investment could adversely affect the start-up of new companies in Egypt, and consequently the country’s manufacturing sector and polyolefins demand.
Second, the CBE’s poor standing will continue to present difficulties to converters in opening letters of credit (LC) recognised by banks abroad, which are necessary to purchase PE and PP imports.
A second Middle East PP producer said: "Egypt is the biggest [African import] market. There is no credit insurance in Egypt, as no banker will take the risk. So we have to accept cash or LC. And even LC are not accepted by all the banks abroad."
Egypt's local PE production is limited to Sidi Kerir Petrochemicals Co (SIDPEC), while PP production is limited to Oriental Petrochemicals Co (OPC) and Egyptian Propylene and Polypropylene Co (EPPC).
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