Commodity Trends and Egypt Equity

Alyaa Stohy
3 Min Read

Naeem Research has prepared a research note on commodity prices and its impact on Egyptian companies listed on the Egyptian Exchange (EGX).

Prices were up quarter-over-quarter (q-o-q) in six commodities, crude oil prices rose by an average 7% q-o-q to $68bn due to ongoing geopolitical risks.

Corn prices continued to increase by 3% in Q2 of 2019 on resilient demand and concerns over lower acreage.

As for raw milk powder, post the 15% surge in Q1 of 2019, prices increased by 4.5%, averaging $3,18 per tonne, impacted by higher demand.

Urea prices hiked by 3% q-o-q on expectations of higher demand as United States agricultural acreage is set to increase this year.

When it comes to steel, post the high single-digit drop witnessed during the previous quarter (on concerns over global growth slowdown), rebar prices managed to increase by 4.4%.

Speaking of iron ore, continuing its uptrend trajectory, prices increased by a sizable 20% in Q2 of 2019 due to supply disruptions faced by some of the largest producers. Prices were up 35% year-over-year (y-o-y) as of Q2 of 2019.

Meanwhile, copper prices remained flat in Q2 of 2019 as well.

On the other hand, prices of six other commodities dropped q-o-q, including petrochemicals, polypropylene, wheat, sugar, phosphate fertilisers, and LNG.

Petrochemicals (petchem) prices, as witnessed during the previous quarters, dropped by 3% q-o-q, due to decreased demand and increased supply.

Polypropylene (PP) prices, declined at a much faster rate, down by 6% q-o-q; while prices in July dropped to a two-year low of $8,123 per tonne.

Prices of wheat dropped by 3% on increased supplies from Russia and improved weather in the US.

Sugar prices were down 3.5% in Q2 of 2019 due to improved weather in Brazil.

Phosphate fertilisers prices, unlike nitrogenous fertilisers, declined by 8% q-o-q due to global oversupply.

Aligned with the drop in global LNG prices, Henry Hub natural gas declined by as much as 12% in Q2 of 2019, due to market oversupply.

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