Ezz Steel has taken “corrective measures” to address the impact of the continued weakness in the global steel sector and “detrimental conditions” in the Egyptian steel industry, the steelmaker says in a statement sent to Kallanish. This comes after its third-quarter performance was hit by imports and energy cost increases.

Three main factors impacted Ezz Steel in Q3, the steelmaker says: “The sudden deterioration of the global steel market, which provoked a surge in the import of dumped steel products into the Egyptian market; the constant disruption of utilities during the summer season, which stopped our production facilities and drastically reduced our total output; the unprecedented increase in energy prices and the severe shortage in foreign currencies in Egypt, which inflated our manufacturing costs.”

Consolidated sales declined -7% year-on-year in the nine months through September 2014 to 3.3 million tonnes. Long product sales fell -7% to 2.63mt, while flats sales, concentrated at flagship steelworks Ezz Dekheila (EZDK), decreased -14% to 624,775t due to lower production. Weak international markets made flats exports unattractive, but local shipments also fell.

Production was hit by constant utilities disruption, especially in summer. Longs accounted for 80% of the nine-month net sales value of EGP 14.9 billion ($1.95bn), while exports comprised 5% of longs sales. Longs prices rose 1% in the local market and remained flat for export.

Flats accounted for 19% of sales value, while exports comprised 41% of flats sales. Local flats prices were unchanged y-o-y but rose in Q3 versus Q2. This occurred “as demand cautiously started to pick up, possibly anticipating a more buoyant Egyptian economy following the conclusion of the presidential election”, Ezz Steel observes.

Ezz Flat Steel (EFS)’s nine-month cost of goods sold at 115% “reflects the continued low capacity utilisation level currently at that facility”, the producer says. “At EZDK, the continuing shortage of natural gas impacted DRI production, forcing the company to use more expensive scrap and thereby suppressing margin.”

The steelmaker thus sunk to an EGP 461 million nine-month net loss in comparison to an EGP 218m profit in the year-earlier period.