Egypt’s government has recently introduced a package of incentives as a measure to soften the economic consequences of the spread of the coronavirus. Among other measures, it has been decided to cut energy prices for industrial users: however, the development once again favors local direct reduced iron (DRI)-based facilities rather than scrap-based ones.
According to the official statement, Egypt will decrease the price of natural gas by $1 per million BTU to $4.5 per million BTU. In addition, the electricity price for heavy industries will be decreased by EGP 0.10 ($0.0063) per kilowatt hour, down from EGP 1.10. The tariff rate for other industries will be stabilized for the next three to five years.
The measure is likely to support the gas-intensive industries such as DRI-based steel production. “For natural gas $1 less means $13/mt on the rebar cost but only around $2/mt for scrap based production,” an Egyptian producer told SteelOrbis. The electricity price cuts, according to sources, will have a limited impact of around $4/mt in terms of costs, sources comment.