Cairo considers new steel import duties

Egyptian authorities are considering imposing new duties on steel imports despite resistance from re-rollers, market participants told Argus.

Cairo could impose import duties on steel billet and rebar in an effort to protect the domestic steel industry, traders said. The import tax on billets could be around 5-10pc of the value or a flat rate of $47/t, while rebars could be subject to 10-15pc import tax, traders told Argus.

It is not clear whether there will be import duties on all steel imports. And it is not clear whether it will be a blanket duty similar to in the US, or if it will be applied on a country basis. There was no official statement from the trade and industry ministry by the time Argus went to press.

But Egyptian re-rollers are likely to resist any increase in import duties because it would lift their production costs. There are around 27 re-rollers in Egypt and almost all of them are dependent on imported billet to produce rebar.

Only around five steelmakers in the country have melt-shops to produce billet domestically, but they use their billet to produce rebar. Should there be a new import duty on billets, the domestic industry would not be capable of supplying the market, traders said.

Saudi Arabia started exporting billet and rebar to Egypt last year, and volumes have steadily increased since then. Saudi billet exports to Egypt reached 35,000t in the first half of this year, compared with no exports in the corresponding period of last year. Similarly, Saudi rebar exports to Egypt reached 20,000t in the first six months of this year, which compares with no imports in the first half of 2017, Saudi customs data show.

Domestic steelmakers in Egypt have been complaining about Saudi material arriving in Egypt at competitive prices, owing to lower production costs in the kingdom. Authorities could take special measures to stem the flow of rebar and billet from Saudi Arabia to Egypt, market participants said.

Egypt imposed definitive anti-dumping duties on rebar imports from China, Ukraine and Turkey in December 2017.

Moreover, Egypt introduced rebar import licensing in March 2016, which prevents unregistered exporters from shipping to the country.

In response, local steel producers in Egypt increased their output and sales. Egyptian crude steel output increased to 6.46mn t in January–October this year, up by 15pc from the same period last year, World Steel Association data show.

Should the authorities impose import duties, the domestic price of rebar and billets — which have been generally stable for most of this year — are likely to rise, traders said. A decline in steel billet imports to Egypt could pressure Russian, Ukrainian and Saudi billet prices, as Egypt is a major billet export destination for all three producers.