CAIRO: Egypt is the region's largest steel importer for the first quarter of 2009, according to a report by the Iron and Steel Federation at the League of Arab States. The report claimed that Egypt imported 2.2 million tons of steel, or 22 percent of all steel imports in the Arab world. These numbers, however, constitute a drastic increase from Egypt's 2008 steel import levels, which were in the range of 200,000 tons. According to Patrick Gaffney, a steel specialist at EFG Hermes in Cairo, the accuracy of the report's data is open to debate. I would be a little skeptical about these numbers, because these volumes are greater than the normal quarterly consumption of steel in Egypt, both flat and long, he said. Egypt's steel market has seen its share of ups and downs over the past year, with price changes, protective measures and the global financial crisis all having an impact on sector growth and composition. Egypt's local market has faced serious competition from international steel imports offered by countries like Turkey and Ukraine. Pricing decisions by Ezz Steel, Egypt's largest local steel producer, have also impacted the volume of imports. Imports in April probably fell due to Ezz Steel s competitive pricing, but imports should pick up again in May as a result of price increases by local steel companies, explained Gaffney. Ezz Steel, which controls around 60 percent of the local steel market, announced price increases of LE 350 per ton effective May 1, 2009. This raise has brought steel prices up to LE 3,200 per ton, compared with Turkish steel, which sells for about LE 2,800 per ton. Rising prices have prompted factories to increase prices as well, bringing consumer prices per ton to LE 3,400 after the recent raise. Egypt's other major steel companies have raised prices by margins of LE 100 to LE 150 in response to the move by Ezz. Competition in the local steel market by importers is a relatively new phenomenon in Egypt, where strong private sector steel manufacturers have historically supplied up to 95 percent of local demand. Local producers manufacture both steel rebars for construction and building, and the flat steel used in the automotive and consumer goods industries. While continuing healthy demand in Egypt's construction sector has fueled production of steel rebars, demand for flat steel has slowed due to the international financial crisis. Reuters reported last month that Ezz Steel has cut production of flat steel by 20 percent since January, brining total production down to 4.5 million tons, a 12.5 percent drop from 2008 levels. While Egypt's steel industry has been hit by global financial turmoil, especially in the flat steel export sector, the rest of the year could bring a measure of recovery. Reuters reported that Ezz Steel expects marginal improvements by the third quarter of this year. Recovery could mean a return to local dominance in the market and a diminished threat of cheaper imported steel. This is, at least what history would suggest, according to steel specialist Patrick Gaffney. "Historically, the local market has almost entirely been supplied by local producers, he said.
