Boston, MA -- (SBWIRE) -- 09/09/2013 -- The petrochemicals industry will not be immune from the political and economic crisis which has been exacerbated by the uncertainties caused by the recent popular uprising amid mass protests against the Muslim Brotherhood government. Egypt's polymer markets are suffering as both government cuts to fuel subsidies and a lack of funds to import fuel hit industry. The 2011 political uprising and ongoing instability is impacting negatively on investment, damaging the country's economy. This has denied the petrochemicals industry access to foreign currency reserves to pay for imports of polyolefins and other products.

Over the past quarter, BMI has revised the following forecasts:

- Reductions in production are likely to raise petrochemicals prices in Egypt, although purchases are likely to fall. Stock levels are high in the short term, but, with end-market demand worsening due to the sustained crisis, it will take time for stocks to be brought down. Liquidity issues also persist due to the higher dollar parity, helping to keep average petrochemicals operating levels at around half capacity.
- Our previous forecast of 6% average market growth per annum - with PP demand up to 585,000 tonnes by 2017 based on domestic industrial growth, particularly in the automotive sector - now looks unattainable.
- With feedstock concerns, political instability and slowing market activity, there are doubts over whether these new facilities will be brought on-stream and, if so, whether they will run at nameplate capacity.
- In our Middle East and Africa Petrochemicals Risk/Reward Ratings (RRRs), Egypt remains in ninth place, with 44.7 points out of 100. Political uncertainties have been exacerbated by the popular uprising that overthrew the elected President Morsi and this is likely to contribute to policy paralysis over the short term, at least. Cuts in natural gas availability held down the country's Market Risk score, which is one of the poorest in the Middle East and Africa, in spite of growing investor interest. Egypt lies 4.0 points behind Turkey and 4.1 points ahead of Algeria. Uncertainties put in doubt plans for capacity growth and Egypt's move towards greater self-sufficiency and export growth.

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