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Egypt Chemicals Report 2009Published by: Business Monitor International Published: Jul. 13, 2009 - 23 Pages Table of Contents
AbstractMarket OverviewIn the first half of 2008 the Egyptian chemicals industry recorded exports of US$10bn, representinggrowth of 47.5%, according to the Chemical and Fertilizers Export Council. This exceeded the target of25% growth that was set by the Ministry of Trade and Industry in 2007. A key driver of growth has beenpesticides, which increased by 77%, and plastic and rubber products, which increased by 58%. One of thereasons for the spike in exports has been the impact of government incentives. In 2006, Egypt beganintroducing subsides to support the export sector. For example, 30% of the export cost of plastic wrappingis now subsidised. However, since the end of H108 the global economy has tumbled into steep declineand the EU (Egypt’s main export market for chemicals) has fallen into recession. With demand dropping,BMI expects Egyptian chemical exports to have fallen sharply in the second half of 2008 and in the earlymonths of 2009. Meanwhile, in 2008, the government removed tax benefits from petrochemicals firms,impacting competitiveness. Business Environment Egypt introduced a 20% tax on profits on foreign petrochemical companies in H208. They also have topay almost twice the amount for their gas supplies as domestic firms. The legislation included theimposition of duty and a rise in prices for natural gas in Egypt’s free trade zone. This marks a radical shiftin policy direction and could undermine foreign direct investment (FDI) inflows at a time when investorsare reviewing their investments in the context of the global economic downturn and financial crisis. Projects, Expansions And Developments In August 2008, Canada's Agrium, a major retail supplier of agricultural products and services, sold itsEgyptian project EAgrium to Egypt's MISR Oil Processing Company (MOPCO). The approval of theEAgrium project, which was already under construction, has been revoked by the Egyptian Governmentowing to protests about its location near the NileDelta. Agrium held a 60% stake in the project, whileEgyptian PetroChemicals Holding and EgyptGas held a combined 24% stake, Egypt Natural Gasheld 9% and Arab Petroleum Investments held 7%. Industry Forecast Egypt’s trade and industry minister, Rachid Mohamed Rachid, has said that exports could fall by 10% inthe 2008/2009 fiscal year as a result of weakening demand in key trading partners. Falling prices andvolumes were particularly impacting sales of petrochemicals and fertilisers, he said. Indeed, prices in theindustry have fallen by more than 50% according to Rachid, while demand has slumped by 20%. Themajority of Egyptian chemical exports go to the EU, which is suffering a severe recession. In 2005,output of chemical products in Egypt was EGP23.28bn (US$4.06bn). It is forecast to reach EGP26.91bn(US$4.68bn) by 2009 Get Full Details About This Report >> |
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