Gas cuts and rising dollar push steel prices up EGP 1,000 per ton

Ezz Steel and El Marakby Steel have raised prices for reinforcing steel and flat steel products by around 1,000 Egyptian pounds ($19) per ton, effective Tuesday, as reduced natural gas supplies to energy-intensive factories and a rising dollar drive up production costs.

The government has cut natural gas supplies to several energy-intensive industries, including steelmaking, to limit the impact of rising global energy prices. The cuts, coupled with a rise in the dollar exchange rate, which has climbed above 53 pounds, are adding to manufacturers’ costs.

Under the latest increase, a ton of Ezz Steel now costs consumers 44,600 pounds ($836), up 3,316 pounds from its pre-October level and nearly 10,000 pounds from the beginning of the year, when it stood at 35,000 pounds.

Mohamed Hanafi, head of the Chamber of Metallurgical Industries, told Al Manassa that major steelmakers, including Ezz Steel, Suez Steel and Beshay Steel, have cut production by around 30% in response to reduced gas supplies. The production cuts, alongside the rising dollar, have contributed to the latest price increases, he said.

An industry source who requested anonymity cited other factors behind the recent increases in domestic steel prices, including higher transportation and maritime freight costs and rising global prices for raw materials and scrap metal.

International scrap prices have recently risen from around $380 to between $407 and $410 per ton, an increase of nearly 10%, adding to pressure on steel production costs, the source explained to Al Manassa.

The effects of higher steel prices and tighter supplies are spreading beyond steelmakers and distributors to the construction sector. Contractors are struggling to secure the reinforcing steel they need as some factories have cut allocations to agents and distributors by between 20% and 35% and shifted from credit sales to cash-on-delivery terms.

The changes are squeezing contractors’ cash flow and threatening delays to real estate projects and the handover of units to buyers, according to four sources who spoke to Al Manassa.

The pressure comes as several real estate projects are already behind schedule. An initial review by the Ministry of Housing identified around 450 developers who were behind schedule, affecting approximately 15,000 projects or project phases currently under construction.

The review followed President Abdel Fattah El-Sisi’s directive in August to form a committee to inspect real estate projects and check whether developers are meeting unit delivery deadlines and honoring contracts with buyers.