HRC producers in both Egypt and Algeria prefer to concentrate on domestic buyers while witnessing a downward trend in export destinations. Not only have prices in the region been sliding, but demand from overseas has been insufficient. While European buyers are on hold, waiting for the country-specific quota announcement, buyers on the African continent are either reluctant to make inquiries or are placing low bids due to competitive offers coming from China. Domestically, Egypt has attempted to increase prices amid moderate demand, while in Algeria buyers have been exerting pressure on mills’ official offers.
In Egypt, the sole HRC producer has officially increased the domestic price by EGP 1,000/mt to EGP 39,000/mt ex-works, in line with the information reported by a few market players. The US dollar equivalent is at $708/mt ex-works, up $18/mt from the previous levels. The supplier is offering for July production currently.
The higher price in the domestic market, according to sources, prevents the Egyptian mill from being active in exports, where the trend has been downward. Particularly, ex-Turkey realistic prices are at $600-610/mt FOB, although indicative offers of around $620/mt FOB have also been voiced, but for September shipments. “With Europe being this silent and the market moving down in the region, I don’t think they [Ezz Steel] would choose to be aggressive,” a local trader told SteelOrbis. “But the domestic price above $700/mt might mean a wider door for imports of HRC,” he added. The last HRC offers from China to Egypt have been reported at $575-580/mt CFR, with potential for $10-15/mt discounts in response to firm bids, buyers state. The latest transaction for Turkish material (with a shorter lead time) was at $620/mt CFR, as SteelOrbis reported last week.
In Algeria, while export demand has been on the low side with even bids being quite rare, the local mill has also been focusing on domestic sales. However, the amount of business activity even in the local market has been insufficient to ensure price stability, not even mentioning the earlier targeted further price increase. “There is demand, but it is on paper, since due to the upcoming parliament election on July 2 the budgeting of projects has been delayed or is on hold. And 80 percent of the market is connected to the government,” a source told SteelOrbis. “Summer and seasonal effects are another issue, also impacting demand,” he added. Another factor is the high stock level particularly of imported HRC in Algeria following the arrival of several cargoes from China, which had been booked earlier.
The current official offer in Algeria is at DZD 108,000/mt ($680/mt) ex-works, while some of the recent deals have been reported at down to around DZD 105,000/mt ($660/mt) ex-works. As a result, some buyers are expected to insist on around DZD 100,000-102,000/mt ($630-640/mt) ex-works. As for exports, Algeria’s HRC price is at $630/mt FOB for July shipments and for the MENA/African region, while the EU is completely silent.
Import activity in Algeria has remained minimal as there are still no licenses for imports in the second half of the year, local sources report. Some think that the government might even stop giving licenses for HRC imports, now having a domestic supplier. Still, despite this situation, the latest offers from China have been quite aggressive - at $595-600/mt CFR for 1.2-6 mm material, down from around $610-620/mt CFR effective available earlier.
Egypt’s VAT is 14 percent.
Algeria’s VAT is 19 percent.
$1 = EGP 49.56
$1 = DZD 133.56
