Posted on 08 Apr 2024
Egypt's benchmark mill, Ezz Steel, has cut its domestic ex-mill rebar prices by 12.5% to EGP 40,700/tonne ($754.8), from EGP 46,500/t, including 14% VAT, due to the Egyptian pound appreciation and lower iron ore prices.
In late February, the market maker reduced its domestic ex-mill rebar prices by 12% to EGP 46,500/t, from EGP 53,250/t, including 14% VAT, notes Kallanish.
Suez and El Marakby have followed suit, setting their new prices at EGP 40,500/t each. Other major producers are still assessing the market and have yet to announce their prices. Payments are in cash, and the dollar conversion excludes the 14% VAT levied in Egypt.
Following Egypt’s pound devaluation last month, the black market exchange rate has risen from EGP 53 to EGP 48 per USD, aligning with the official rate of EGP 47.3. This convergence of exchange rates has led to a decrease in prices, signalling a more stable financial environment. A senior mill official explains: "With banks now financing the import of raw materials, the black market rate has lost its relevance, contributing significantly to the overall economic stability of the country."
Egyptian rebar consumption in February decreased by 31.4% on-month from 711,100 tonnes in January, but increased by 12.1% on-year – to 487,6000t, El Marakby Steel chief business development officer Ramy Saleh tells Kallanish.
Egypt's financial security has received a boost with the increase in foreign currency reserves, which rose to $40.3 billion by the end of March, compared to $35.3 billion in February. This significant increase further strengthens Egypt's economic position, providing a cushion against potential economic shocks and supporting the country's development initiatives.
The government signed an agreement with the United Arab Emirates to receive $35 billion in funding for the Ras El Hikma urban, commercial and tourism centre project on the country's northern coast. This was finalised in February.
"Under the terms of the deal [Ras El Hikma], $11 billion of the UAE's deposits with the Central Bank will be transferred to the local currency for use in the project, while Egypt will receive the remaining amount in cash," the Egyptian government states.
"Egypt expects to receive the second instalment of funds from the Ras El Hikma deal in early May next year," notes Egyptian Prime Minister Mostafa Madbouly. Following the deal, Egypt was able to secure external financing commitments from several parties totalling more than $58 billion.
Source:Kallanish
