CAIRO: A handful of Egyptian steel companies have unexpectedly hiked prices, setting off a debate over whether the companies were acting to make up for increased manufacturing costs or whether they were seeking greater profit margins. Steel companies across Egypt have begun boosting prices by LE 50 to LE 100 per ton, a move they say reflects an increase in prices globally, local press reported. Suez Steel raised its prices on Thursday by LE 100 to LE 2,500 per ton, while Misr National Steel followed suit by bumping prices to LE 50. The move comes at a time in which steel prices have slid precipitously and are only now showing signs of stability. "Steel prices have fallen significantly over the last nine months, said Patrick Gaffney, Vice President at EFG-Hermes. "But we are starting to see some stabilization due to real demand for steel in Egypt and more stable prices worldwide. Some experts have argued that these price increases are part of an effort to artificially give the appearance that demand is back on the increase. That said, analysts do expect global commodity prices to recover this year after, generally speaking, they bottomed out early this year. "From a macro standpoint, said Reham ElDesoki from Belton Financial, "we could see an increase in commodity prices across the board. The Ministry of Trade and Industry has reportedly vowed to combat the recebt artificial price hikes that some of the steel companies have implemented. Government officials announced confidence that this sort of price manipulation would have little impact on the stability of the industry. Some analysts agreed. "A LE100 increase in the price of a ton of steel would not be significant in and of itself, said Gaffney. "But a sustained increase would likely cut off significant demand from people building their own homes that have been taking advantage of lower building material prices. Commodity prices had slid dramatically as the global economic crisis set in. Demand tumbled and companies worldwide slashed prices to encourage consumption. The latest move by the Egyptian steel companies mostly involves steel billet. The Egyptian steel industry has suffered heavy losses during the economic recession. Industry leader Ezz Steel reported earlier this month that its first quarter profits had fallen 85 percent. A company employee attributed the severe decline both to the decrease in demand locally and also in the collapse of the export market based on low international demand. Closure of the company's flat steel factory also contributed to the losses. The collapse of the flat steel industry has most significantly contributed to the decline of steel. The real estate market, which drives the long steel industry, fared better in the recession than most industries. Flat steel, mainly used in industry, led in bringing steel prices lower. As steel prices begin their rebound, government officials and analysts alike will be keeping watch to see whether more companies boost prices in a way that could meaningfully impact the market.
