Petrotahlil - Following a year of disappointing performances, Egypt’s PP and PE markets seem to have started to gather momentum, with early price discussions for January indicating a steady-to-firm trend. Although not up to the level of former years, several market players reported a mild improvement in demand with 2020 safely under way.
Players leave behind a year of persistent weakness
2019 was a year marked with persistent weakness in demand, which forced sellers to cut their offers almost continuously to lure the reluctant buyers into the market. Import PE market, which became one of the targets of the competitively-priced US cargoes, was dragged down to its lowest level in almost a decade, according to ChemOrbis Price Index.
Data also showed that the same scene occurred in the distribution market, with prices ending the year at historical lows, and the domestic suppliers struggled to maintain their margins and stay competitive within the markets.
January outlook shaped by divergent factors
By the end of December, early indicators for January had emerged in the PE markets, with the outlook pressured between firm energy costs and disappointing demand. Although slow end-products sales and cash problems dictated the PP prices in December, players began talking of steady to slightly firmer levels due to rising crude oil futures. This view was supported by a distributor who said that there were signs the market had reached the bottom.
Early offers came in line with expectations
These expectations proved true after a major Saudi supplier announced increases for the first time in almost nine months last week. This was followed by other Middle Eastern suppliers, who revealed similar pricing patterns in Egypt.
While a limited number of offers have been heard so far, the recent announcements were able to tilt the trend upwards.
Sellers find support from energy prices
Despite the fact that the market sentiment is yet to show a visible sign of a rebound, several traders reported a mild improvement. In addition to higher energy costs, this optimistic outlook also supported the early prices.
Will prices hold firm?
It remains to be seen whether the firm prices could be sustained in the long term as the recent increases were not exactly demand-driven, but rather resulting from firmer energy costs. Some buyers even think that prices may see some downward revision later during the month, succumbing to weak demand. However, it seems “unlikely that we will see December levels again”, as one distributor put it.
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