Egyptian steel manufacturers have slashed production over the past three months as domestic billet shortages and rising import costs squeeze operations, though market stagnation has kept rebar prices from climbing further, according to three industry sources.
The output cuts follow a 13% anti-dumping tariff on billet imports enacted in April for a three-year period, which covers cost, insurance, and freight (CIF). Rolling mills, which represent roughly 20% of the domestic steel market, have seen elevated raw material import costs due to the tariff which curtailed their ability to secure necessary supply.
Ashraf El Garhy, vice chairman of El Garhy Steel, said his plant reduced monthly output from roughly 70,000 tons to just 15,000 tons over the past three months due to domestic procurement bottlenecks and high import costs.
The mill received no more than 35,000 tons of billet from Ezz Steel and Suez Steel combined since April, a supply drop of over 80% compared to its standard operational needs.
Ayman El Ashry, chairman of El Ashry Steel Group, stated that his facility has been completely halted for a month due to the raw material shortage. While several rolling mills initially sustained operations by drawing on pre-tariff stockpiles, those inventories have recently run dry, leaving other factories struggling to source raw billet. Manufacturers have submitted memos to the Cabinet detailing the crisis and its operational fallout.
Sluggish consumer purchasing remains the primary barrier preventing the raw material crunch from pushing final prices higher, said Ahmed El Zeiny, head of the Building Materials Division at the Federation of Egyptian Chambers of Commerce. Market stagnation makes passing on additional cost increases difficult, even as production costs rise and operating rates decline.
Current trading activity reflects no active demand pressures from consumers, El Zeiny noted. He called for reducing production costs and opening raw material access across all producers to boost market competition.
With steel storage costs mounting and capital turnover slowing, El Zeiny projected that prolonged stagnation will force factories and traders to introduce price discounts or sales incentives.
Raw billet currently costs around 34,000 Egyptian pounds ($685 equivalent) per ton, plus roughly 500 pounds in transport expenses, against a final rebar selling price of about 37,000 pounds per ton, according to El Garhy.
Because producing one ton of rebar requires approximately 1.1 tons of billet, raw material pricing forms the main cost component of the end product, causing rolling mills to incur losses at current market rates.
The anti-dumping tariff added roughly 5,000 pounds to the cost of importing a ton of billet after taxes and fees, bringing the landed price in the local market to approximately 33,000 pounds per ton, El Garhy said. Industry sources noted that the April tariff contributed to an immediate local price surge of 3,000 to 3,500 pounds per ton, bringing rebar close to 40,000 pounds per ton, following a prior increase of 2,000 to 3,000 pounds per ton in January.
Mohamed Hanafy, director of the Chamber of Metallurgical Industries at the Federation of Egyptian Industries, downplayed the broader market impact of rolling mill shutdowns, emphasizing that imports remain accessible despite higher post-tariff costs.
Mills are currently operating at about 50% capacity due to weak demand, which leaves sufficient unutilized capacity in the market to meet current consumption levels despite production drops at individual facilities.
However, Hanafy warned that if capacity cuts extend into a rebound in construction activity, current supply gaps could rapidly turn into upward price pressures unless the billet supply issue is resolved or import costs decline.
