Steps are being taken to help the steel market in Egypt adjust, Sherine Nasr reports On 21 March, Minister of Trade and Industry Rachid Mohamed Rachid announced a new decree No 216 increasing steel export duties to LE180 per tonne from LE160 on four out of nine categories of iron and steel. The four main categories upon which the minister elaborated at a press conference, are, however, among the least exported items. The decree also excludes iron and steel items required in infrastructure and public utility projects and projects in free zone areas. This is the second move by the Ministry of Trade to help stabilise the cement and steel market after months of speculation. "The move to impose export duties is legitimate by WTO standards," said Rachid who further added that the ministry is not dictating prices but is rather aiming at increasing competition in the local market. The decree, he thinks, will maintain the profitability of local cement and steel factories. "This is a temporary decision that will be annulled once stability is restored in the market," said Rachid who added that the ministry encourages Egypt's steel and cement exports. "I want to maintain Egypt's market share of these two products." It is worth noting that Egypt is one of the big players in the cement and steel export market as it was among the top 10 exporters with seven million tonnes of cement and almost two million tonnes of steel exports last year. On 27 February, the ministry took the first step in stabilising the market by issuing decree No 142 which imposed additional export duties of LE65 per tonne on cement and LE160 per tonne on steel. The decree included other rules to further regulate trading operations in the local market. These measures were taken after prices of both products in the local market rose to unprecedented levels. The price of a tonne of steel reached LE3,800 from LE3,350. The rush to reap the benefits of exporting steel to meet an ever- growing demand has left the local market with less supplies, which has led to inflated prices. But while international prices increased by 10 per cent during February, local wholesalers and distributors increased steel prices by 30 per cent, thanks to speculations. Although steel traders cautioned that the decision to impose extra duties on exports should be applied gradually so as not to disrupt any deals that have already been signed by steel factories before the decree was issued, Rachid confirmed that the latest decisions have neither affected Egypt's exports of steel and cement nor discouraged exporters. "Even after imposing the extra export fees, the business is still very profitable," said Rachid who added that profits for selling in the local market range from three to five per cent. Meanwhile, 25 cement and three steel licences have been issued since the decree. Plans by operational companies to expand capacity are underway. "Investors understand the reasoning behind the decree and the market can handle it," said Rachid. At present, the ministry has launched a monitoring policy with cement and steel dealers, agencies and producers to identify export figures, sales to the local market, quantities sold and stocks on a weekly basis. "We are not controlling the market. This aim is to create a full data base of the market." In the meantime, the Competition Commission has been investigating all companies in the steel and cement market for monopolistic practices. A full report will be issued in the next three months and actions will be taken where malpractice is proven. Other market regulatory measures will include a national energy strategy for industries which will be completed by summer. "Once an energy policy for industries is completed, we will be in a much clearer position on how to calculate costs particularly for energy- intensive industries such as steel," said Rachid who added that out of a LE40 billion energy subsidy, LE7 billion goes to industry. Although energy prices increased by18 per cent since last year, other increases are being planned. "Yet, energy prices for industries are still lower than international prices."
