Egyptian import billet market has been reopened for the international sellers as the local government has decided to cancel the earlier valid safeguard duties.
The measure has also been levied for steel rebar and aluminium, therefore the market players are trying to assess the possible effects on both semis and rebar segments and how the development might affect the prices. Naturally, for now, most of the expectations are optimistic, although some points remain unclear.
Egypt’s Ministry of Trade and Industry has taken a preliminary decision to terminate the safeguard duties on billet and rebar imports, which were imposed back in April 2019 and were supposed to be valid until April 2022. The initial duty for billet was set at 16 percent (or minimum $74/mt) and was supposed to be decreased to 10 percent (or minimum $46/mt) for the period of April 12, 2021 – April 11, 2022. As for rebar, the duty was at 25 percent (or minimum $125/mt) and was to be reduced for the same period to 17 percent (or minimum $85/mt). According to sources, the Egyptian government has taken such a decision in order to support the industrial sector which has been suffering from high costs of production, amid certain shortage of semis in the local market, specifically impacting the domestic re-rolling companies.
As a result, Egypt, which had been a significant steel importer before the safeguard was introduced, is expected to provide good opportunity for the international sellers, now when the measure has been revoked. In terms of billet trade, the gate for imports is considered wide open and this might support the pricing in the region, especially now when the situation in Asia is pessimistic. “I think there will be a new market [to sell to], which is good because for now Asia is lost,” a large trader told SteelOrbis. Some market players expect a temporary billet price increase from the CIS and report that Egypt has already started asking for offers, however, they agree that Egypt might not be enough to compensate the absence of Asia in terms of volumes for the CIS-based mills, at least at once. In addition, Turkey will be a competitor in terms of billet sales, taking into account lower freight rates, specifically from the Southern ports. Currently, the ex-CIS billet prices are estimated at $625-640/mt FOB but might increase shortly due to some optimism in the market.
While in the billet segment the situation is rather clear for now and the trade is expected to be there once the market finds the right price according to the rebar levels in Egypt and the mills’ rolling costs, the issue with the steel rebar is somewhat different. Although the safeguard has been revoked, the product is still subject to some other trade restrictions. In particular, there is a valid antidumping duty for some specific Turkish mills between 7-13.5 percent and at 22.8 percent for other producers of the same origin. Ukraine’s ArcelorMittal is restricted by 17.2 percent while all Chinese rebar is subject to a 29 percent duty. The AD rates are valid until June 5, 2022. In addition, according to a rather old regulation, the exporting mill has to be registered in the white list of Egyptian export and import authority. Some Egyptian sources also state that there is an additional 10 percent development duty on finished products, imported for trading purposes.
Still, taking into account that the current domestic rebar prices in Egypt are at around $835-855/mt (EGP 15,000-15,350/mt) ex-works, the rebar imports are considered possible. Turkish mills, which have been suffering from the low export demand, might be there and also the certain effect of the lira devaluation on their export prices might result in some sales to Egypt. Currently, ex-Turkey rebar prices are at $740-750/mt FOB in offers while the lowest most recent sale was closed at $725/mt FOB. In such a situation, according to some CIS-based sources, if rebar sales begin, Turkey itself might show the increased appetite for import billet. Therefore, the import rebar situation, although being questionable in Egypt for now, might still support the billet market sentiment in the region in an indirect way, SteelOrbis understands.