Egypt’s Rebar Prices remain Stable despite Hike in Imported Billet Offers

The rebar prices in Egypt that have observed dramatic movement (first up and then down trend) in the time span of two months in Feb-Mar18 are going stable since the month of April. There is hardly any change in the rebar offers from major players.

The last offers for rebar from country’s biggest rebar producer, Ezz Steel was heard at EGP 12,525-12,528/MT (USD 700-702/MT) while another major domestic producer, Beshay Steel, is offering rebar at EGP 12,525 per tonne (USD 701/MT). These prices are on ex-works basis and include VAT of 14%.

However, the raw material for rebar, billet imported offers have increased this week by USD 5-10/MT and are currently being traded at USD 535-540/MT on CFR basis. Egypt mainly imports its billet requirement from Russia and Iran. The main reason for the increase in billet offers this week is the market participants resuming their buying activities once again after the end of holy month of Ramadan. But the stability in rebar prices despite surge in billet offers can be attributed to Egypt’s tepid domestic demand from the construction sector.

Egypt has recently announced new cuts to electricity subsidies, raising prices by an average of 26% from the new fiscal year starting from 21 Jul’18. According to the reports, Egypt has committed deep cuts to energy subsidies and other tough fiscal measures as part of a three-year, USD 12 billion International Monetary Fund (IMF) loan programme that began in 2016. The government said that the fuel price rises would have to rise in July to keep the subsidy reform programme on track and that the electricity subsidies will be phased out completely by the end of the 2021-2022 fiscal year.

Subsequently, this hike in country’s electricity charges can trigger the raise in country’s rebar offers in the coming months.

On the supply side, Saudi Arabia’s Hadeed SABIC has registered itself as an exporter in Egypt in order to supply rebar into the country and thus the inflow of the same is likely to increase thus aggravating the competition in Egypt’s domestic rebar market.