New Energy market report from Business Monitor International: "Egypt Petrochemicals Report Q2 2013"

Boston, MA -- (SBWire) -- 03/18/2013 --BMI View: After examining the impact of the transition to democratic civilian rule on the petrochemicals industry, we believe that market growth in 2013 will be sluggish in some segments as investors wait to see what the new government will offer in the way of economic policy. This report also looks at planned capacity expansion, which is focused on the ethylene, polyethylene (PE) and fertiliser sectors and should see Egypt become self-sufficient in certain products over the next five years.

The Muslim Brotherhood government has brought with it a period of uncertainty for the Egyptian petrochemicals industry both in terms of political stability and policy continuity. Protectionist measures implemented after Mohamed Morsi became president in June 2012 have largely failed to bring about growth in the petrochemicals sector. Nevertheless, the passing of a new constitution, in spite of controversy, should help increase the focus on policy-making, setting the stage for the development of a framework for investment and growth in petrochemicals. However, added to national political division is the proposed US $4.8bn IMF loan, which will tie the government to unpopular public spending austerity measures that will both heighten unrest and limit domestic market growth.

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Over the last quarter, BMI has revised the following forecasts/views:

- A lack of fresh foreign investment could adversely affect the start-up of new companies in Egypt, and consequently the country's manufacturing sector and polyolefins demand. Meanwhile, the central bank's poor standing will also present difficulties to converters in opening letters of credit recognised by banks abroad, which are necessary to purchase polyethylene (PE) and polypropanol (PP) imports, which could have the effect of supporting domestic production which is limited to Sidpec's PE production and PP facilities run by Oriental Petrochemicals Co (OPC) and Egyptian Propylene and Polypropylene Co
- Structural weaknesses were evident in H212 when Methanex reduced capacity utilisation to 70%, stating that it would maintain that rate of output until the country becomes more stable. Methanex closed its 1.3mntpa plant in Damietta from late August to late September because the unit's gas supply was cut off by the government following electricity shortages caused by an unusually hot summer.
- EPPC is adding value to its PP output with planned commencement of block copolymer PP production in H113; it was producing just homopolymer PP, which is mostly used for woven sacks in the agricultural sector as well as uses in carpet production. Demand for the PP copolymer is smaller on the Egyptian market but will serve the injection moulding sector.

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