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Egypt banned documentary collections and compelled importers to issue L/C regulation
Posted on March 1, 2022
- At present, traders sell on credit to Egyptian importers on a verbal agreement without any collateral, meaning no renegotiation on agreed prices for importers in a falling market.
- The L/C regulation removes the possibility of the importers canceling or renegotiating the shipment, which will force the importer to purchase.
- In an up-market, competing traders outnumber each other to protect their suppliers from working with new partners, causing the price of lumber to rise to unsustainable levels.
- The new regulations require L/C, which will be backed by collateral and it will reduce import levels and stabilize the market from the regularly witnessed volatility and will lead to stronger correlation FAS/EXW prices for China.