In June 2018, the Kenyan government increased import duty on steel from 25% to 35% in order to protect its domestic industry from cheaper imports. Apart from cushioning the local industries from low-cost imports, the new import levies are expected to raise an additional revenue of Kenyan Shilling 2.6 billion annually in revenues.
However, reports suggest that despite these protectionism measures, manufacturers of iron and steel products in Kenya are likely to still face stiff competition from Egypt which being a member of the trading bloc – Comesa (Common Market for Eastern and South African Countries) brings duty-free imports into Kenya. Comesa which was formed in 1994 is a free trade area with 21 members including Kenya and Egypt both.
The industry participants in Kenya believe that as Egypt’s imports come under Comesa arrangement and are completely duty-free, this increase in import duty on steel by Kenyan government makes it ineffective. Also, the domestic demand for steel in Egypt at present is quite tepid and as Egyptian steel manufacturers get lot of subsidies from the government, their imports in Kenya makes them more competitive.
Kenyan imports of steel and iron were the main drivers of the import bill in 2017. Kenya imported 1.3 MnT of steel and iron, a decrease from 1.4 MnT of the metal that the country imported in 2016. As per the reports, the government aims is to attract investments valued at Sh100 billion in the iron and steel industry by 2022. This, the Government hopes to achieve by developing a policy and incentive framework, establishing coal and iron deposits and committing Government share of at least 30% to the iron and steel players in the country.
Egypt’s billet offers fall, rebar prices remain stable
As per SteelMint sources, the imported offers for billet to Egypt has registered a fall by USD 5 /MT week on week basis and currently being heard at USD 515-520/MT on CNF basis.
In the case of rebar, domestic rebar prices in Egypt remained unchanged, with offers coming in at EGP 12,525-12,528 per tonne (USD 700 – 701/MT) ex-works, including 14% VAT. However, two market players, El Marakby and El Garhy have lowered down their rebar prices by EGP 200 -300 per tonne (USD 11 – 16/MT) and their current rebar prices are heard at EGP 12,200/MT (USD 683/MT) and EGP 12,250/MT (USD 686/MT) respectively on ex-works basis, including VAT of 14%.
In the near term, market participants believe that rebar prices from other manufacturers may also fall following downtrend in its raw material scrap and billet prices.
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