Some progress might be seen soon in the billet safeguard case in Egypt after months of court sessions and postponements. According to the local media, the advisory committee has presented the technical evaluation of the billet safeguard duty and will submit its recommendations to the Ministry of Trade and Industry. The draft paper suggests keeping the import duty in place for three years, but at the rate of seven percent for the first year, with its reduction to five percent and three percent in the following two years, respectively, SteelOrbis understands. The current safeguard duty at 15 percent was imposed for 180 days and will expire on October 15.
Market players evaluate such recommendation as more or less positive for local steel suppliers, for both integrated/semi-integrated and re-rolling companies, at least for the first year. “The safeguard duty will be imposed for three years for sure and 7-9 percent is the equilibrium for my point of view,” a local source told SteelOrbis. The decreased duty rate would partly protect steel producers on their cost side and at the same time would provide the rolling mills with the chance to keep some healthy margins while using import billet. However, the duty proposed for the second and third years at five percent and three percent will be more beneficial for re-rollers, market sources have said.
If accepted by the authorities, the regulation may also support the billet sector in the region overall, taking into account that the CIS suppliers have been suffering from the lack of demand in the Mediterranean. However, this might take a while as Egypt currently has sizeable billet stocks at ports; players estimate those as at least 350,000-400,000 mt, SteelOrbis understands.
There has also been information circulated in the market that the safeguard duties have been discussed at a higher level - 15 percent for the first and 12 percent and 10 percent for the second and third year. But in case of duty above 10 percent, integrated and semi-integrated mills will be in a better position.
The final court decision is expected on October 5.