Effect of export tax on the Egyptian market

SteelOrbis has heard that overall steel prices fell between EGP 200/mt and EGP 330/mt ($35-58/mt) in the Egyptian domestic market due to the export tax of EGP 160/mt (around $28/mt) imposed by the Egyptian Ministry of Trade and Industry on February 28. One of the major reasons behind the export tax, though all iron-steel products are subject to the new tax, is the higher rebar prices in the domestic market. The export tax, which is not valid for previous bookings, will be applied to all new bookings. Although the effect of this tax has not appeared in the export market yet, it has already impacted on the domestic market. The decline in prices seems to have impacted negatively on import companies as well. It appears that the price decline in the domestic market will cause end-users to focus on local products instead of imported goods. Currently, Chinese H-profile offers for Egypt are at $600-630/mt CFR Alexandria, depending on sizes. Taking into consideration that the delivery prices to end-users in the domestic market will be at around $600/mt, it seems unlikely that the Chinese offers will be accepted in the domestic market, though they are favorable. However, this situation will probably not last long for goods, such as H-profile, which are not produced in Egypt. On the other hand, since most Egyptian producers are booked full for around two months, this may cause imports to rally again. Of course, it will be clearer in the upcoming days whether the Egyptian Ministry of Trade and Industry will make new decisions on the issue and how these will affect the Egyptian market.