Surging costs catch out Egypt’s rebar re-rollers
1483 Views
Egyptian re-rollers increased domestic rebar prices at the beginning of the week by EGP 800/tonne ($51) to EGP 14,900-15,250/t ($950-970), including 14% VAT, in line with higher billet prices. This translates to $830-850 excluding VAT.
On Tuesday, Egypt’s largest integrated steel producers, Ezz Steel and Suez Steel, followed the trend, each hiking prices by EGP 400/t to EGP 15,000/t and EGP 14,900/t respectively, including 14% VAT.
However, re-rollers have been caught out by the price increase. Since the beginning of September, when scrap and iron ore prices were on a downtrend, they have operated with minimal billet stocks. They were unprepared for the recent surge in scrap and coal prices, as well as energy prices in Europe, India and China.
There is still a safeguard duty – at current prices – of around $65/t on billet imports into Egypt, and this makes re-rollers vulnerable against integrated mills who can produce their own billet and then re-roll it to rebar, comments a sector participant.
“The price increase creates demand from stockists, traders and retailers; however, we don’t have enough rebar stock to satisfy their needs,” says a local re-roller sales manager. “The earliest raw material supply will take two weeks. Among end-users, we don't expect steady growing demand.”
To protect re-rollers against sector giants, the government should re-consider the safeguard duty rates and grant building licences, he adds.
At the beginning of November, another EGP 400/t ($25) increase in rebar prices is highly likely, due to increasing raw materials prices, freight, and energy costs, which will make the business environment more difficult, Kallanish notes.
For five months until this week, Egypt's domestic rebar prices were steady and mills were offering 10-32mm rebar at EGP 12,280-12,719/t ($781-810/t) delivered, excluding 14% VAT, on 45-60-day payment terms.
Burak Odabasi Turkey