Egypt Imposes Provisional Anti-dumping Duty on Steel Imports

According to the latest updates, the country in MENA region, Egypt has imposed provisional safeguard duty on the imports of steel products that include both finished and semi-finished steel in order to protect domestic steel industry with an exception to imports originating from developing countries.

Products subject to provisional duty

The products subject to the proposed safeguard measure are Semi-finished products of iron or non-alloy steel and steel rebar (bars, rods, and coils) for construction purposes (the products concerned). The products are classified under the following H.S. tariff item numbers within the Egyptian Customs tariff schedule 72 13, 72 14 and 7207.

Product Tariff Item Provisional measures

The duty will come into effect from 15 April 2019 and will be into effect for the next 180 days.

The reason for duty imposition

The investigating authority has determined that there has been an injury to the domestic steel industry not due to contraction in demand, change of patterns of consumption, technology progress, local competition, exports, and changes in exchange rates but due to a sudden increase in the imports of specified products especially in the second half of 2018.

Increase in Imports

The data currently available with Egypt’s customs indicates that imports of the products concerned increased in absolute terms by 31% during the second half of 2018 against the first half of 2017.

Furthermore, the volume of imports increased in relative terms to domestic production by 17% during the second half of 2018 when compared to the first half of 2017.

Plunge in domestic market share

In H2 2017, the domestic industry’s market share increased by 7% against first half of 2017 whereas in H1 2018 the same plunged by 6% against H1 2017. In H2 2018 the same decreased by 10% against H1 2017.

Increase in domestic production and capacity utilisation

The domestic industry’s production was increased by 23% in the H2 2017 and by 16% during H1 2018 against H1 2017. This increase is accompanied by a sharp increase of inventory as a result of decrease in sales.

The capacity utilization was increased by 23% in H2 of 2017 comparing with H1 2017. It decreased in the second half of 2018 by 16% when compared to the first half of 2017.

Surge in domestic industry losses

The domestic industry achieved losses in H1 2017 and this loss had changed to profit in H2 2017. However, the profits were once again turned to losses in H1 2018 which further increased to 119% in H2 2018 compared with H1 2017.

Exception to developing countries

Egypt has exempted developing countries from the provisional safeguard duty. According to the official notification, imports from developing country members shall not be subject to the proposed provisional safeguard measure as long as each member’s exports individually do not exceed 3% of total imports into Egypt. In addition, the share of the members with less than 3% import share does not collectively account for more than 9% of total imports into Egypt.

The likely impact

This imposition of provisional safeguard duty on semi-finished steel is likely to make the Egyptian re-rollers unhappy because it would lift their production costs.

There are around 27 re-rollers in Egypt and almost all of them are dependent on imported billet to produce rebar. Only around five steelmakers in the country have melt-shops to produce billet domestically, but they use their billet to produce rebar. According to industry sources, with the import duty on billets, the domestic industry would not be capable of supplying the market.

Saudi Arabia started exporting billet and rebar to Egypt last year, and volumes have steadily increased since then. Saudi billet exports to Egypt reached 35,000 tonnes in the first half of this year, compared with no exports in the corresponding period of last year. Similarly, Saudi rebar exports to Egypt reached 20,000 tonnes in the first six months of this year, which compares with no imports in the first half of 2017, Saudi customs data show.
Domestic steelmakers in Egypt have been complaining about Saudi material arriving in Egypt at competitive prices, owing to lower production costs in the kingdom. This would have made the authorities to take measures to stem the flow of rebar and billet from Saudi Arabia to Egypt, market participants said.

Egypt has already imposed definitive anti-dumping duties on rebar imports from China, Ukraine and Turkey in December 2017. Moreover, Egypt introduced rebar import licensing in March 2016, which prevents unregistered exporters from shipping to the country.