Egypt's Housing Min. reviews joint water, wastewater projects    Egypt seeks Indian expertise to boost pharmaceutical industry    Egyptian pound shows stability vs. USD in early trade    Egypt's PM heads to Japan for TICAD 9 Africa development summit    National Council for Childhood reviews plan to combat child labour    Egypt's Supreme Organ Transplant Committee strengthens oversight, standards    Price cuts underway across Egypt, says trade federation report    African agribusiness market expected to reach $1tr by 2030    Israelis protest for hostage deal amid growing pressure on Netanyahu    Serbia's Vucic vows 'tough measures' against protesters after unrest    Zelenskyy seeks US security guarantees as Trump says he can 'end war now'    Egypt prepares unified stance ahead of COP30 in Brazil    Egypt's FM, Palestinian PM visit Rafah crossing to review Gaza aid    Egypt delivers over 30 million health services through public hospitals in H1 2025    Egypt recovers collection of ancient artefacts from Netherlands    Egypt harvests 315,000 cubic metres of rainwater in Sinai as part of flash flood protection measures    Fitch Ratings: ASEAN Islamic finance set to surpass $1t by 2026-end    Renowned Egyptian novelist Sonallah Ibrahim dies at 88    Al-Sisi says any party thinking Egypt will neglect water rights is 'completely mistaken'    Egyptian, Ugandan Presidents open business forum to boost trade    Egypt's Sisi, Uganda's Museveni discuss boosting ties    Egypt's Sisi warns against unilateral Nile measures, reaffirms Egypt's water security stance    Egypt, Huawei explore healthcare digital transformation cooperation    Egypt's Sisi, Sudan's Idris discuss strategic ties, stability    Egypt's govt. issues licensing controls for used cooking oil activities    Egypt to inaugurate Grand Egyptian Museum on 1 November    Greco-Roman rock-cut tombs unearthed in Egypt's Aswan    Egypt reveals heritage e-training portal    Sisi launches new support initiative for families of war, terrorism victims    Egypt expands e-ticketing to 110 heritage sites, adds self-service kiosks at Saqqara    Palm Hills Squash Open debuts with 48 international stars, $250,000 prize pool    On Sport to broadcast Pan Arab Golf Championship for Juniors and Ladies in Egypt    Golf Festival in Cairo to mark Arab Golf Federation's 50th anniversary    Germany among EU's priciest labour markets – official data    Paris Olympic gold '24 medals hit record value    A minute of silence for Egyptian sports    Russia says it's in sync with US, China, Pakistan on Taliban    It's a bit frustrating to draw at home: Real Madrid keeper after Villarreal game    Shoukry reviews with Guterres Egypt's efforts to achieve SDGs, promote human rights    Sudan says countries must cooperate on vaccines    Johnson & Johnson: Second shot boosts antibodies and protection against COVID-19    Egypt to tax bloggers, YouTubers    Egypt's FM asserts importance of stability in Libya, holding elections as scheduled    We mustn't lose touch: Muller after Bayern win in Bundesliga    Egypt records 36 new deaths from Covid-19, highest since mid June    Egypt sells $3 bln US-dollar dominated eurobonds    Gamal Hanafy's ceramic exhibition at Gezira Arts Centre is a must go    Italian Institute Director Davide Scalmani presents activities of the Cairo Institute for ITALIANA.IT platform    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Mazut price hike domino effect reaches sugar, paper, building materials
Published in Daily News Egypt on 11 - 01 - 2008

CAIRO: The 100 percent hike in the price of mazut (fuel oil) from LE 500 to LE 1,000 per ton caused a domino-effect in the market, elevating prices of building materials, sugar and paper.
The government's decision sparked turmoil in sectors that heavily rely on fuel oil for production. Brick kilns producers were among the first to feel the effect, reporting a slump in sales after the price increase.
Producers explained that contracts with dealers were based on old prices but had to be modified after the mazut price increase, as it constitutes 45 percent of operating costs. Dealers, however, rejected the price change.
Prices of bricks have already gone up early this year to LE 515 per ton and then soared to LE 1,020, following the mazut price upsurges.
The decision has also adversely affect prices of cement, which have been rising almost steadily to LE 410-420 per ton. The price hike is expected to heavily impact the country's housing market.
Officials explained that the reason behind the mazut price surge was to unite domestic and global prices, especially in light of growing domestic demand to 8.5 million tons per year.
The mazut price increase comes as part of the government's policy to liberalize prices of energy products for industrial purposes. Prices will be fully liberalized in 2009, and subsidies gradually removed to raise prices to actual cost levels, recently announced Minister of Trade and Industry Rachid Mohamed Rachid at a roundtable discussion on energy products and subsidies.
Rachid pointed out that the government did not abruptly raise prices of mazot, as the decision was previously announced last August under restructuring of energy prices. Despite the recent increase, he added, domestic mazut prices were still much lower than international ones, which reached LE 2,400 per ton.
The restructuring of energy prices for industry is part of a more comprehensive plan to restructure domestic markets, stabilize prices and address informal trade.
The ministry will present to parliament in the current parliamentary round a draft bill to regulate internal markets, involving the amendment of 40 laws.
"A three-year program to restructure prices of natural gas and electricity for industrial purposes [already] commenced in September 2007, spearheaded by the Ministry of Trade and Industry, said Beltone Financial.
"At the end of the three-year period, in 2009, prices of electricity and natural gas will have risen to their cost-recovery level, effectively removing subsidies on energy for heavy industry, [while] light industries were granted a one-year grace period.
Petroleum industry experts expect the government to further raise prices of petroleum products in the period between April and July after recent increase in the price of mazut.
According to Al-Masry Al-Youm newspaper, sources at the Ministry of Petroleum stated that it did not make sense to maintain the price of diesel at LE 600 per ton and not raise prices of other products after the increase in mazut prices.
The sources expected an increase in prices of gasoline as well, excluding 80-octane gasoline.
However, other sources at the ministry rejected these claims, confirming that there are no intentions to increase prices now, especially following the commotion caused by the new mazut prices.
"Despite the conflicting statements, we do believe that the government will move soon on the prices of petroleum products, including diesel and gasoline, to reduce subsidies on the products used by the higher income groups and redirect subsidies to the energy and non-energy products used by low income groups, Beltone Financial told Daily News Egypt.
"We expect the timing to be some time in early 2008, when the level of inflation is relatively lower and seasonal inflationary pressures have run their course.
Sugar has escalated to reach around LE 200 per ton following the increase in mazut prices, since the product is burned chiefly to produce sugar, adding more operational costs on producers.
Mazut is also used in paper factories, which implies that price of paper products will increase by an estimated 50 percent.
In a bid to contain the effects of price hikes, the Petroleum Ministry revealed plans to extend natural gas (which is cheaper than fuel oil) to factories that rely on mazut for production.


Clic here to read the story from its source.