Egypt to Recover Steel Production to Meet Local Demand to 2017

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Researched by Industrial Info (Cairo, Egypt)--According to 2010 statistics, Egypt produced steel products locally with a capacity of 6.5 million tons per annum, and to cope with a rise of 7% to 8% in local demand, it relies on steel imports from countries such as Turkey and Ukraine.

Egypt placed 10th among the top 20 steel-products importing countries during the January-September period of 2009, with a volume of 4.9 million tons, according to a paper presented by Steve Mackrell, director of operations at the London-based Iron & Steel Statistics Bureau (ISSB), at the Arab Steel Summit 2010 held in Marrakesh, Morocco.

In 2008, Egypt granted four licenses for Ezz Steel, Suez Steel Company, Taybah Steel and Egyptian Sponge Iron & Steel to plug a 1 million to 1.5 million ton supply gap, about 2 million tons of rebar and 1 ton of billet annually to local market to fulfill the country's 12 million ton steel requirements by 2013. In the same year, besides these four licenses, another one was awarded to ArcelorMittal (NYSE: MT) (Luxembourg) the world's leading steel company in competition with international companies from India, Saudi Arabia and United Arab Emirates.

ArcelorMittal had a problem with the Industrial Development Authority (IDA) before, which delayed construction works on the project, but the company commenced construction and contracted with the electricity sector in August last year. The company announced this month about continuing to invest in the steel field in Egypt. It has started to open talks with the state owned Egyptian Iron & Steel Company to modernize and upgrade the old plants and add another production line on the site of the Egyptian company, with an estimated investment value around $1.8 billion.

In December 2010, IDA announced the list of companies which were awarded another four licenses to build steel projects in different places in Egypt. This list included Port Said National Company for Steel (Raswa Industrial Area-Port Said), IIC for Steel Plants Management (Al-Menya Upper Egypt), Al-Marakbi (Sixth of October industrial city) and Al-Wataniya (Assuit-upper Egypt). The government, through these licenses, guaranteed that a further 2 million tons of finished steel and 1 million tons of billets will be available annually to the local market to compensate 1.5 to 2 tons of imported steel through 2017.

Last month, Samir Al-Sayad, Egypt's Minister of Industry, reactivated the steel projects through a meeting with the licensed companies as he pledged to secure the stake of natural gas, which had been allocated before the revolution, for the steel projects amounting to 230 million cubic meters as well as issuing all permits and official documents on condition that the companies had paid licenses fees and finalized any rights required and satisfied the legal requirements acquiring licenses.

This week Egyptian Iron & Steel was awarded a $28 million contract to export about 40,000 tons of steel products to Saudi, Lebanon and Jordan. This contract is the first after two months of market depression due the disturbances in Egypt.

The local producers of the steel in Egypt are looking to increase their production in quantity and quality to be able to compete with imported steel and export surpluses. Ezz Steel gave up the steel market monopoly in Egypt after revolution and now occupies around only 35% of the Egyptian steel market instead of 60% before the revolution.

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