Egypt Petrochemicals Report Q2 2016
BMI View: While Egyptian market growth experienced some slowdown in 2015, the local petrochemicals industry managed to defend sales and even hike prices in Q4 due to the depreciation of the Egyptian pound and disruption to imports. The industry is likely to experience sustained growth as domestic capacities expand.However, upstream resources need to be secured for the petrochemicals industry to be taken to the next level.
Egypt is one of the most promising growth markets for petrochemicals and in spite of infrastructural andfeedstock constraints it is set to become a significant exporter of petrochemicals over the long term. Planswill be put into operation in 2016 for a series of new plants over the next five years, culminating in CarbonHoldings' world-scale Tahrir Petrochemicals project, which is set to come into commercial operation in2020.
While local production is benefitting from a weaker exchange rate and import difficulties, it has not escapeda squeeze on margins as cost pressures have risen. In spite of a lack of US dollar liquidity, lower pricesoverall and electricity supply problems, Sidi Kerir Petrochemicals Co (Sidpec) was expected to sustainsales at EGP3bn in 2015. However, unaudited financial statements by Sidpec showed that company's profitsdeclined by 8.5% year-on-year (y-o-y) in 9M15 to EGP664.98mn.
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