Egypt says safeguard tax may be insufficient to protect industry as billet prices collapse

Thursday, 26 March 2020 17:27:56 (GMT+3)   |   Istanbul
       

As the timing for the planned billet safeguard duty reduction is approaching in Egypt, the Egyptian authorities have expressed concerns regarding whether the trade restriction would sizeable enough to protect domestic producers from the impacts resulting from the collapsing global market.

On April 11 this year, according to the decision of Egypt’s Ministry of Industry and Trade published in October 2020, the safeguard duty for import billet is due to be revised from 16 percent (or a minimum of $74/mt) to 13 percent (or a minimum of $60/mt) for a period of one year. According to the recent statement of the Egyptian Iron and Steel Association, the significant fall in billet prices seen globally threatens the local steel industry in Egypt. Another issue is that energy prices have decreased in billet producing countries, which can potentially harm Egypt’s steel mills as well. In particular, according to the statement, natural gas prices in Egypt are still among the highest in the region, at $4.5 per million BTU versus $3 per million BTU price mainly seen in the Mediterranean region.

As a result, the mentioned authority considers the valid safeguard billet duty is no longer workable as a measure aimed at protecting local steel producers. However, if no adjustments are made and the tax is reduced as scheduled, it may give a breather to local re-rolling companies, SteelOrbis understands.

It is also worth mentioning that on the same date the import duty for rebar and wire rod is expected to be reduced from 25 percent (or a minimum of $125/mt) to 21 percent (or a minimum of $105/mt). Considering the falling prices for longs, in Turkey specifically, some potential wire rod business is possible, while in the rebar segment Turkey is additionally restricted by antidumping duties of up to 19 percent.


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