The Ministry of Industry and Foreign Trade has decided to cancel protective tariffs on steel rebar imports. The decision was taken after investigations conducted by the Anti-Dumping Authority showed that the local industry was not harmed by duty-free steel imports. Mounir Fakhri Abdel-Nour, the minister of internal trade and industry, said that the decision would not add to costs for consumers as Egypt had not imposed tariffs on steel since June 2013. Steel rebars and coils had been subjected to a 6.8 per cent duty and a minimum of LE299 per tonne for 200 days, he said, starting in November 2012 and ending in June 2013. The protective fees had been imposed on the back of complaints from the Chamber of Metallurgical Industries at the Federation of Egyptian Industries that cheaper imports were making it hard for local industry to compete. At that time, the government had announced that it was devoted to protecting local industries from foreign counterparts in accordance with World Trade Organisation (WTO) and international regulations. WTO regulations permit countries to impose protective tariffs for a limited period of 200 days. Abdel-Nour explained that WTO regulations stated that in cases of local industries' complaints, a country is given a period to study the case within 12 months of imposing protective tariffs. This 12-month period had ended on 21 November, he said, the day he had announced the tariffs were being cancelled. Abdel-Nour said that “there is no harm in local industries imposing protective tariffs on imports, though these could have a negative impact on Egypt's reputation in the international community.” According to Abdel-Nour, removing additional tariffs could also benefit consumers as the market would not be controlled by local producers. The moves came as the market has been seeing a spiralling increase in steel prices, reaching LE6,000 per tonne last week compared to LE5,500 in March amid a weak supply. While traders say factories are reducing their supplies to increase prices, the former accuse the traders and distributors of hoarding large amounts of steel to raise prices over those charged by the factories. According to official figures, local steel production increased in October and November, as shown in the weekly production figures that the Ministry of Industry obliges steel producers to send it. Based on these reports, which shows an upward trend in production levels over the past few months, Abdel-Nour said that producers were not to blame for the shortages of steel in the market. According to monthly economic indicators issued by the cabinet's Information and Decision Support Centre (IDSC), local production of steel during October increased by 71 per cent and sales surged by 68 per cent compared to the previous month. Moreover, factories are committed to announcing their monthly steel prices at the beginning of each month, according to a ministerial decree, as was noted by Mohamed Hanafi, general manager of the Chamber of Metallurgical Industries. Hanafi said that in November total production had edged up by 10 per cent and the average of announced factory prices had come in at LE4,950 per tonne, though this had jumped to LE6,000 per tonne after it was made known that the protective tariffs would be annulled. “Traders and importers have stored large amounts of steel in an attempt to prove that there was a shortage in the local market and that there was a need for importing steel, which was not true,” he said. The full capacity of local steel factories can cover market needs with an extra amount of 50 per cent, according to Hanafi. Annual local consumption is seven million tonnes, while full local capacity can reach 10 million tonnes, he said. Steel producers said that during 2013 when the protective tariffs were imposed the local market was stable since factories were able to cover local market needs at good prices. Hanafi explained that steel was sold at LE4,800 per tonne in January 2013, but due to the pound's devaluation steel prices had risen to LE5,400 in March. When local steel prices went down, rebar prices also went down to LE5,000 per tonne in October. Ayman Abdel-Aziz, a civil engineer, said that during the past few years steel had been available in the market, and its prices had averaged between LE4,000 and LE6,000 per tonne, which was good compared to the hikes in the prices of other building materials. In reaction to the minister's decision, the Chamber of Metallurgical Industries presented a memo complaining that the removal of protective tariffs would harm local industries. According to the memo, the presence of duty-free steel imports would mean that local factories might resort to decreasing their production capacities by 30-50 per cent. This would not be beneficial to the economy, Hanafi said, since when local production decreases tax revenues also decrease. However, decreasing imports would mean saving foreign currency. In 2012, steel imports stood at 600,000 tonnes, at a total cost of $400 million. “Why does Egypt pay foreign currency to import products when we have alternatives that meet international specifications,” Hanafi asked.
