Following a long period of discussions, the Egyptian authorities have imposed additional 10 percent import duties on a range of steel productions with the restriction valid from today, June 24. The measure has been called to additionally protect local industries and to widen the possibilities to increase revenues within the frame of the policy to cope with Covid-19 consequences, similar to what was done in neighboring Saudi Arabia. Local market players, however, doubt the restriction will have a major positive effect on the local steel industry as imports have already significantly decreased.
According to the official document disclosed to the public, the 10 percent duty will be imposed for imported finished steel, including rebar, wire rod and the range of flat products. In the meantime, steel semis are not subject to the restriction, and so billet imports to Egypt remain subject to 16 percent safeguard as previously. Sources expect that longs producers will not gain much from the imposed measure as the segment is well protected by the existing safeguard of 25 percent. “Imports [of rebar and wire rod] have already disappeared. Today it is the issue of capacity versus demand,” a local producer said.
A larger positive effect is expected in the flats segment to the benefit of local producer Ezz Steel, which dominates the local hot rolled coil market. However, some details are yet to be clarified by the government. Some sources assume the imported products, which are processed and fabricated in Egypt, may be exempt from the duty. In this case, there will be hardly any benefit from the 10 percent tax as most importers to the country are pipe and coated steel producers. “This one is not clear at all. I suppose there should not be any exemption as otherwise the government will not get the best benefit from it because most importers possess industrial licences,” a producer told SteelOrbis.
As a result, market players are waiting for some clarifications of the rules regarding the new duty imposition to be disclosed shortly. “For now, everyone tries to understand whether there is any opportunity for business left or not. In the longs segment, I would say there is none. In regards to the flats we will see,” a large trader said.
