CAIRO - The iron trade is witnessing a recession due to price reductions of up to LE300 per tonne. Manufacturers imported billets (small metal bars) and complain about financial pressure, which may lead to a collapse of the whole industry. According to Mohamed Hanafi, head of the Mineral Industries Chamber, last month the prices of iron rebars decreased globally from $735 to $685. Billets decreased from $690 to $600 due to the recession that hit major industrial countries. In Egypt, the price of iron rebars reached LE4,800 last month. Manufacturing companies cut the sales price, although they had bought billets at high prices. They also imported Turkish iron in light of the current recession. 27 factories were already forced to close down. The alternative was to cut prices, Hanafi added. If global prices decreased even further, Egyptian companies would have to cut the price again. Until now there was no indication that prices would rise in the short term, due to the financial debate in the US, which contributed to the recession, affecting minerals such as copper and gold. Hanafi pointed out that iron-manufacturing plants would need to buy raw materials at low prices to reach production targets. If the market improved and prices rose, they would use the stored raw materials bought earlier at higher prices. Hanafi stressed to Al-Ahram semi official newspaper that consumers would benefit from low iron prices. Iron factories were between a rock and a hard place; if they used the raw materials bought at high prices it would lead to difficulties and if they kept the raw iron until conditions improved they would run into problems with their banks. Atef Hendi, a trader and owner of an iron factory, confirmed that the prices had decreased globally. “All of us suffer. We purchased expensive billets from Turkey and the Ukraine,” he said. “These imports cause problems; there is only a difference of $30 dollars between the price of a tonne of billets and manufactured iron. This profit margin is too small to pay wages and cover production costs.” Mohamed el-Marakbi, a factory owner and importer, noted that the market suffered from shrinking due to the Eid feast and the imported iron on the local market. An iron manufacturer also blamed the situation in the local market on low profit margins; confirming that purchasing prices for imported billets were too high, while sale prices for locally manufactured iron were too low.
