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Amidst a significant drop in crude oil prices last week, a pocket of tightness in the Egyptian market led to a significant increase in local HDPE prices this past week. Tight local supplies and disrupted deliveries from the domestic producer pushed blow moulding prices well above levels seen in the first week of August. Injection prices shared a similar fate, moving higher week over week, but film grade was mainly unchanged.

As of the end of last week, the high end of local HDPE blow moulding prices moved up by EGP300/ton week over week or around $50/ton. Overall injection grade prices rose by EGP100-200/ton, approximately $17-34/ton.

Tight supplies of both grades were blamed for the rising prices, but blow moulding was the tighter of the two grades as evidenced by its greater price increase. The local producer SIDPEC confirmed that it had switched its production line from blow moulding to film grade and was not delivering blow moulding grades to the market.

This was the second time in about a month that blow moulding supplies were limited in the country. During the second week of July, SIDPEC had conducted a week long maintenance and noted that it was short on blow moulding supplies due to the shutdown. Market players also complained about the limited availability at the time, but the market environment did not encourage Egyptian players to stock up on import supplies last month since July PE prices had been announced with decreases of $30-140/ton and SIDPEC had just announced an $83/ton decrease for the month. The decreasing trend did not inspire confidence in restocking.

Now supplies are tight once again and converters complained about trying to secure their needs. A plastic container maker commented early last week, “HDPE blow moulding supply is extremely tight. Distributors are giving offers but they don’t have material. Meanwhile we are experiencing good end product demand but we are having difficulty to secure what we need of blow moulding supplies. Injection supplies are also dwindling, although we were able to purchase what we needed.” Distributors on the other hand said that converters were receiving their quotas but distributors were not able to take delivery of material.

When compared to August import offers, a local blow moulding price is $89/ton above the high end of the import range and up to $139/ton above the low end of the import price range after adding an estimated $30/ton to the import prices for clearing and handling charges. Locally held injection prices are $22-58/ton above imports using the same calculation.

The outlook for this week is for renewed supplies. A source at the local producer said that they would resume deliveries this week.
 
Copyright 2006 Oyada Plastech All right reserved     
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