Egyptian producers disagree on billet duties, rebar imports

Some rebar producers in Egypt believe that the country should apply duty at 6-8% on imports of steel billet, while others argue that billet imports are essential if enough rebar is to be produced domestically, Fastmarkets heard on Friday November 23.

The first group believe that billet duties will facilitate an increase in domestic billet capacity. But the latter group believe that it is imports of rebar, not billet, which pose the greater threat to the domestic market.

Billet is the feedstock material for rebar.

There are rumors that some mills in Egypt intend to invest in billet production and want to secure contracts with potential buyers. But a trader noted that even these producers may have to import billet when scrap prices rise, because production costs are already high in Egypt.

Egypt currently applies no duty to billet imports but it does impose duties on rebar imports from China, Turkey and Ukraine.

Those producers and traders which believe that rebar imports are harming the domestic market believe that fewer rebar import licenses should be granted. Currently, most such licenses are held by Saudi Arabian companies.

Egypt imposed permanent anti-dumping duties on rebar imports from China (at 29%), Turkey (7.0-22.8%) and Ukraine (17.2-27.0%) in December 2017.

Imports from Saudi Arabia and other Arab countries, however, are not subject to any duty at the moment.

The CIS region is currently the main supplier of billet to Egypt.

Rumors that duty will be imposed on billet imports have negatively affected demand in Egypt, with prices softening as a result.

Egypt is home to about 27 operations that re-roll billet into rebar, but current domestic billet capacity is not enough to supply these mills without supplementary imports.

Egypt has capacity for about 13.5 million tonnes per year of rebar while its billet capacity is about 12 million tpy.

Despite the country’s rebar capacity exceeding that of billet, Egypt has been importing large quantities of rebar from Saudi Arabia since June 2018.

Production costs are lower in Saudi Arabia, and Egyptian producers are feeling the squeeze.

Local mills in Egypt have not changed their rebar prices since late August and have been offering the product at E£12,180-12,198 ($679-680) per tonne ex-works since then, including 14% VAT.

An executive at a rebar producer in Egypt noted that the main reason why producers have kept their prices unchanged for more than two months was that they are under pressure from rebar imports.

Despite increasing costs for billet, scrap and electricity, domestic producers must compete with imports so must keep prices low, the executive added.

The current retail price of Saudi Arabia-origin rebar is E£12,100 per tonne including 14% VAT in Egypt.

Saudi Arabian rebar was being offered this week at $550 per tonne cfr Egypt.

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