28 May 2019
Temporary import tariffs imposed by the Egyptian government on steel billets and rebar steel are hurting the steel rerolling and construction sectors in the country, according to industry spokespersons from the Federation of Egyptian Industries (FEI).

Last month, Reuters had reported that the Egyptian government imposed temporary import fees of 15 percent on iron billets and 25 percent on steel rebar for 180 days.

The report, quoting local newspapers, said manufacturers had urged the trade ministry to implement the anti-dumping measures because of a global oversupply of billets as a result of US import restrictions. Last year, the US had imposed 25 percent tariff on iron and steel imports.

Ayman Ashry, Chairman of Ashry Steel and member of FEI's Chamber of Metallurgical Industries told Thomson Reuters Projects that the increase in the price of steel billets due to the Ministry of Trade and Industry's import curbs have raised input costs for independent steel rollers, who depend on imported billets unlike integrated steel companies who make their billets.

Billets are an essential raw material for the production of steel rebars.

Ashry said steel prices in the domestic market shot up by more than 677 Egyptian pounds per tonne ($40/tonne) within a month of the imposition of import tariffs.

"Steel rollers have already suffered steep cost increases in the first month after the imposition of import fees, which has put at stake the survival of 22 rolling mills that together represent 30 billion pounds ($2 billion) of investments," he said.

The Ashry steel chief said he expected major projects to be adversely affected due to insufficient supply and inability of the affected rolling mills to fulfill contracts.

Independent steel re-rollers cater to 20 percent of domestic steel rebar market, he added.

Chamber of Metallurgical Industries member Hossam Farhat told Thomson Reuters Projects that billet prices have increased by more than 300 pounds per tonne ($18/tonne) after the imposition of tariffs.

In April, regional English language publication Arab Weekly had reported that Egypt's steel factories need eight million tonnes of billets for steel production every year, but only 4.5 million tonnes are produced domestically.

Gamal El-Garhy, Head of the Chamber of Metallurgical Industries told Thomson Reuters Projects that he expects domestic steel prices to exceed 13,000 pounds per tonne ($772/tonne) in the coming days due to the protective tariffs.

He pointed out that the US government had corrected its mistake after local markets witnessed a steep increase in steel prices after the hike in import tariffs imposed on steel and aluminium products.

Tarek Al Gioshy CEO of AlGioshy Steel Group told Thomson Reuters Projects that the decision to impose temporary protective tariffs by the government negated the benefits of the decline in dollar-pound exchange rates and the prices of raw materials, mainly copper and scrap, on the international metal exchanges.

He pointed out real estate and road projects are the biggest consumers of steel rebars and would be most impacted by the steep increase in steel prices.

There are 27 steel rebar plants in Egypt with a total capacity of eight million tonnes per year, according to the Chamber of Metallurgical Industries data.

The Egyptian steel industry is the second largest in the Middle East and North Africa (MENA) region in terms of production and the third largest in terms of consumption.

(1 US Dollar = 16.84 Egyptian Pounds)

(Reporting by Eman Hamed; Editing by Anoop Menon)


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