CAIRO: Local steel and cement producers announced pricing policies for August, the local press reported Sunday. We expected a decline in steel prices and prices have been declining gradually over the past two months. I expect prices to drop a little more, but I don t think there will be a drastic change, Patrick Gaffney, a steel expert at EFG Hermes, told Daily News Egypt. Ezz Steel Rebars announced a LE 100 reduction in ex-factory steel prices for August, from LE 2,900 per ton to LE 2,800. "We have been expecting Ezz to reduce its steel prices and we view this as positive news for the group since it strengthens its competitive position in the local market at a time when Turkish imports are being sold at LE 2,850 per ton, stated a sector note released by Beltone Financial. Al Attal Steel maintained wholesale selling prices at LE 2,875 per ton and retail prices at LE 3,025 per ton, while Beshay Steel reduced ex-factory prices by LE 175 per ton, Al-Mal reported. "This drop in steel prices was the result of large quantities of imported steel coming into the market covering current demand, said Magdy Sobhy, an economist at Al-Ahram Center for Political and Strategic Studies. Three other local steel producers, unable to compete with the announced price reductions, halted production following the release of the new pricing policies, Al-Akhbar reported. According to Gaffney, the dropping steel prices could have a positive effect on the local construction industry, though falling demand could have contributed to the price reductions in the first place. The dropping prices are positively impacting the local construction industry, and the decreased prices are a function of pressure from Turkish imports and possibly falling demand, he said. On the cement front, CI Capital revised local cement consumption estimates for 2009 upwards from 42 million tons to 46 million tons based on low steel prices, government infrastructure projects and the backlog of private sector construction projects. The upward revision is based on a 25 percent growth in local cement consumption since the beginning of the year, up from a 14 percent overall growth in consumption recorded in 2008. CI's sector note stated that the government's plan to continue construction of middle-income housing units would help maintain the construction boom and bolster local consumption. The cement export ban, extended recently to October 2010, and the growing presence of imported cement in Egypt's markets will help satisfy local demand into the future, the note said. Cement prices skyrocketed to LE 650 per ton recently, raising fears of price fixing by local cement monopolies. However, the arrival of increased quantities of imported cement in the market could ease the upward pricing trend, according to Sobhy. "Local cement production is sufficient for demand, but manufacturers deliberately control the quantities in the market and there aren't sufficient imported quantities to stabilize the price, as is the case in the steel market, he said. -Additional reporting by Raghda El-Halawany
