Egypt’s local PP and PVC producers under maintenance
In Egypt, local PP producer EPPC, with a nameplate PP capacity of 400,000 tons/year, entered a maintenance shutdown on September 13 and is planning to resume their operations by the middle of October, according to a converter who claimed to have confirmed this information with the producer. However, by the time of publication, this information had not been confirmed by the producer directly.
In June, the Egyptian government applied a 15% or $267/ton protection fee, whichever was higher, on homo-PP imports to the country. These protection fees were to stay for 200 days, from June 5 until December 22, 2012, but EPPC was required to provide the market’s full homo-PP needs during this period, as per the pricing service of ChemOrbis.
Despite the producer’s claims of being able to cover the market’s needs, players claimed otherwise, complaining about the lack of supplies apart from PP raffia. With discontent widespread in the market and EPPC entering maintenance, the Egyptian Minister of Industry and Foreign Trade Hatem Saleh decided to cancel the imposition of the protection fees for the year 2012. The decision took effect as of September 12.
This decision was allegedly taken at the request of EPPC after they came across a problem at their plant and reduced their operating rates to 50% capacity before entering a maintenance shutdown, during which time they aim to add some equipment and raise their total capacity to 36,000 tons/month.
Although players are happy with the removal of protection fees, they are feeling worried about limited supplies, as per ChemOrbis. They complain now that EPPC, who was not completely covering the market in the first place, is under maintenance and that it is too late for them to import materials since the major Middle Eastern producers have already agreed with their customers and allocated their materials. “Even if we order import materials right now, our cargoes will not arrive in Egypt until November,” some complain. Players complain that this tightness has harmed their business during the high season in line with the start of school since they could not secure import cargoes beforehand.
In fact, four major converters were already reported to have halted their operations for 2-3 weeks due to a lack of PP. Despite the removal of the protection fees, locally held PP raffia prices moved up by EGP400-500/ton ($66-82/ton) over this past week.
In the PVC market, local producer EPC also started a maintenance shutdown at their 80,000 tons/year PVC plant before the Ramadan holiday started. The producer is planning to restart their plant in late September or early October. During their maintenance, EPC continued to supply the market while they rolled over their PVC k67-68 and k70 prices at the beginning of last week. Players are happy with EPC’s rollover decision since overall demand is not supportive of any price hikes. A converter confirmed that the producer is delivering to the market without any problems.