Egyptian Steel Companies Forge Ahead with Expansion Projects in Spite of Poor Earnings in 2009

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Researched by Industrial Info Resources (Sugar Land, Texas)--Earnings results for the 2008-09 fiscal year were announced by the Metallurgical Industries Holding Company (Cairo, Egypt) during a general assembly headed by Dr. Mahmoud Mohi Eddin, Egypt's minister of investment. The results showed $203 million of earnings during the fiscal year, compared to earnings of $352 million in the 2007-08 fiscal year. Exports in 2008-09 were valued at $689 million, compared to $1 billion in the previous year. Metallurgical Industries is one of the largest Egyptian holding companies operating under the provisions of the Public Enterprise Law.

Zaki Basuni, president of the holding company, attributed the lower earnings to lower exports and demand, particularly domestic demand for aluminum, iron and steel products. A global collapse in prices for these products also played a key role in the drop in earnings.

In spite of Metallurgical Industries' results, work is under way by Egypt's private steel companies to secure financing for construction and equipment upgrades to increase productivity. Examples include the following:

• EzzSteel (Cairo) has signed a $350 million contract with two Egyptian banks to fund the construction of a direct reduced iron plant with a capacity of 1.9 million tons per year. The plant will be built in Ain Al-Sukhnah, near Suez. The plant is expected to start production in late 2011.
• In 2010, Egyptian Iron & Steel Company (Cairo) intends to achieve the production levels of 2008. In 2009, the company's sales for flat and long steel products fell 35% and 30%, respectively, from 2008. The company plans to produce 850,000 tons of crude steel. The company has started construction of a new oxygen plant that is projected to become operational in 2012 and is also completing the overhaul for a blast furnace and establishing an integrated information system.

It is worth mentioning that Egyptian rebar producers followed the lead of Ezz-Steel by announcing a rise in price quotes for February of between $30 and $43 per ton as a result of the rise in prices of scrap and billet on the world market. Consumer prices range between $628 and $647 per ton.

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