Billet price surge and gas hikes pressure Egyptian steel industry
Egyptian integrated steel mills raised raw billet prices by about 1,000 Egyptian pounds per ton at the start of this week to reach 34,000 pounds (about $650), four traders told Al Manassa, deepening a supply crunch that has shuttered independent rolling mills across the country.
Producers drove through the price increases amid escalating production costs and a depreciating currency. The hike intensifies an acute crisis hitting re-rolling mills, which face starved domestic supplies and surging import costs following a government decision last April to impose a 13% anti-dumping tariff on billet imports for three years.
Mohamed Hanafy, director of the Chamber of Metallurgical Industries at the Federation of Egyptian Industries, attributed the latest billet price surges primarily to exchange rate shifts. The US dollar crossed the 52-pound threshold in mid-September, colliding with cumulative production expenses and steep global energy spikes over the past six months.
Producers absorbed initial fractional increases because each incremental hike carried limited standalone weight; however, Hanafy told Al Manassa, their compounding weight ultimately forced mills to implement a single, retroactive price correction.
The raw material surge directly foreshadows downstream price pressure. Days earlier, market leader Ezz Steel hiked rebar prices by 1,000 pounds per ton, pushing ex-factory prices to 40,850 pounds (about $780). That move followed an announcement by El Garhy Steel raising its own prices by roughly 1,100 pounds per ton starting early this October.
The managing director of an integrated steel manufacturer, speaking to Al Manassa on condition of anonymity, revealed that operating and manufacturing costs climbed by between 4,000 and 5,000 pounds per ton over recent months without being passed along to clients at the time.
Industrial energy tariffs drove much of that balance sheet erosion. The state-supplied natural gas price jumped by roughly $2 per million British thermal units (BTUs), the source added.
“Producing one ton of steel demands 11 million BTUs,” the executive said. “With the gas hike, the production cost per ton surged by around $22—equivalent to roughly 1,200 pounds under current exchange rates.”
Imported scrap metal and essential production components climbed by approximately 2,000 pounds per ton following the currency’s slide. Regional hostilities further inflated freight and maritime shipping charges as Brent crude soared to $108 per barrel, up from $67 before this year’s escalations. A concurrent 16% increase in electricity rates added further overhead.
These cost transfers land squarely on secondary rolling mills, which operate without raw smelting capacity and face severe feedstock deficits. Ashraf El Garhy, vice chairman of El Garhy Steel, confirmed that his firm shuttered two plants entirely, while a third limps along at barely 15% capacity due to the critical billet deficit and a yawning gap between factory costs and market retail prices.
Integrated producers currently supply only 5% of the actual operational needs of rolling mills, with delivery intervals dragging out over two to three months, El Garhy told Al Manassa.
He added that independent mills have completely exhausted their port-bonded stockpiles of imported billet, sparking production line closures and idling manufacturing capacity.
The crisis is now prompting political intervention. Ayman El-Ashry, chairman of El-Ashry Steel Group, said domestic steel manufacturers are drafting a formal memorandum for the Cabinet detailing market dislocations and the structural bottlenecks threatening rolling mills.
The memo aims to set the agenda for an anticipated joint summit between primary steel producers and rolling mill operators scheduled for Oct. 11.
Integrated mills imposed the price hikes while downstream processors could not secure raw materials in the first place, El-Ashry explained to Al Manassa.
“My factory hasn’t received any billet shipments for an extended period, and raising prices simply inflames an already severe shortage,” El-Ashry said.
He emphasized that disrupted billet pipelines have gutted output across the industrial base, forcing partial curtailments across several facilities while others have shut down equipment entirely for more than two months.