The Positive Steel Demand Outlook for Egypt amid Boom in its Construction Sector

Egypt’s construction sector shows no signs of slowing down with 1,400 active construction projects worth USD 348.2 billion currently underway in the country.

The latest market reports suggest that the country’s construction market has recorded a 10% growth last year against a growth rate of 5.3% that is seen in last four years. Moreover, 68% of the projects totaling a combined value of USD 142 billion are in the advantaged stages of development.

An estimated USD 178.4 billion worth of projects are also in their early stages “highlighting the projected growth of construction in Egypt”. Notable projects out of a total USD 348 billion currently in the pipeline in Egypt include the USD 3.8 billion Mountain View iCity in New Cairo and the USD 3.7 billion Citadel Refinery in Cairo.

In Jul’18, the Egyptian construction giant Orascom, Japan's Toyota Tsusho Corporation, and French electricity heavyweight Engie have announced their plans to develop a 500MW wind farm in Ras Ghareb, northern Egypt, under a build-own-operate (BOO) model.
This project is set to become the largest renewable energy wind project of its kind in Egypt and that the consortium had already started their work on the same.

As per the industry experts, at present Egypt’s GDP growth is steady, inflation is declining, tourism and remittances are on the rise, and foreign reserves are increasing. All of these factors are driving the country’s economy in general, and the construction market specifically towards the new frontiers which in turn will lead to positive demand for the country's steel.

Egypt’s billet and rebar market scenario

The country is dependent upon imports in order to meet its billet requirements which it majorly procures from Iran and CIS. According to sources CIS-origin billet is being sold at USD 500 �" 505/MT, CFR basis whereas Iran is currently offering billet USD 495 �" 500/MT, CFR basis.

Shipping from Iran has become more difficult because the introduction of new trading sanctions by U.S. announced in the month of Aug’18, and increased freight costs have reduced the number of available vessels willing to carry Iranian material. The situation will get worse from Nov’18 when U.S. will announce tougher sanctions that will include sanctions on Iran’s crude oil and transactions via its Central Bank.

The domestic rebar producers El Marakby and El Garhy have already lowered their rebar prices by EGP 200-300 (USD 11-17/MT) in the first half of Aug’18 whereas the other producers Ezz Steel ad Beshay Steel reduced their offers by the same amount in the last week of Aug’18.

Ezz Steel is currently offering rebar at EGP 12,198 (USD 682/MT) per tonne ex-works for September production, and Beshay Steel is offering a similar product at EGP 12,180 per tonne (USD 680/MT) ex-works, including 14% VAT. El Marakby and El Garhy rebar prices are heard at EGP 12,200/MT (USD 682/MT) and EGP 12,250/MT (USD 685/MT) respectively on ex-works basis, including VAT of 14%. The rebar prices in Egypt are falling amid a plunge in the raw material scrap and billet prices.