Egyptian rebar sales declined -19% on-year in April to 470,200 tonnes, their lowest monthly figure since September 2014, Kallanish learns from the latest Central Bank of Egypt (CBE) data.

This came on the back of a promising first quarter which, despite a -4% on-year drop, saw sales of 2.02 million tonnes, equating to 673,333 tonnes/month. One factor attributed to the lower April deliveries is the slow adjustment by buyers to rapidly surging domestic and global steel prices.

The average price of April sales was up 4% on-year to EGP 5,061/tonne ($570/t). This was also up almost EGP 90/t from March as well as being the highest price since November 2014. This rapid increase was a result of surging international steel prices caused by a spike in Chinese demand, and the weakening Egyptian pound increasing steelmakers' cost of raw materials.

Rebar production declined -13% on-year in April to 546,800t. Egyptian crude steel output that month fell -11.5% to 410,000t. Direct reduced iron production was flat on-year at 210,000t.

Egyptian rebar sales in January-April thus fell -7% on-year to 2.49mt, while output was down -6% to 2.3mt. The drop in four-month production was much steeper, at -29% to 1.57mt, as Egypt continued to suffer from gas shortages which restricted DRI production and forced mills to import billet.

Ezz Steel foresees Egyptian rebar consumption rising 8% in 2016 to 8.1mt and imports declining -40% to 840,000t as a result of rising prices and the new import regulations. However, gas shortages will continue to impact local integrated mills’ steel output, supporting a rise in billet imports to 4mt.

The government is yet to enact into law a draft resolution it put forward in March to decrease natural gas prices for Egyptian steelmakers to $4.5/million BTU from $7/m BTU.