As Egypt’s only producer of polyethylene, Sidpec’s Alexandria site is an important hub for high-value heavy industry. Government gas subsidies have helped it maintain profitability amid the cyclical nature of the commodity plastics market, despite domestic demand being affected by the country’s struggling economy. Sidpec is one of the most stable companies on the Egyptian stock market due to its monopoly position and dollar-denominated operations, according to the local Pharos Research.

One major threat to Sidpec’s future profitability is the potential decline of oil prices, as the sales prices of its products are directly linked to the crude market. If oil declined significantly, the price of polyethylene would likely drop and the company’s naphtha-based competitors in Europe and Asia would become more competitive.

The low feedstock prices that the firm currently enjoys could also be threatened. With the current price decided by the government before the 2011 revolution, it is difficult to predict how the new regime will set gas prices for the country’s petrochemicals industry.

In terms of expansion ambitions, some petrochemicals developers in Egypt have reportedly been facing taxation issues and environmental opposition, as well as difficulties in raising finance since the revolution.

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