Egypt: Saving the national industry requires supporting the productive sector, especially iron and steel

It seems that the gas file is still permanently controlling the industrial sector in Egypt during this period, in light of the decline in demand for products exported to some sectors as a result of the increase in their prices locally, due to the high cost of production due to the rise in gas prices in Egypt by more than 2 dollars, compared to On world prices, natural gas in Egypt is recorded at 4.5 dollars for industry, while its global average price ranges between 2 and 2.5 dollars.

The enforcement of the national industry requires in the first place a review of production costs. Indeed, the Industry Modernization Center affiliated with the Ministry of Industry and Trade has conducted several studies on the impact of gas price on sectors such as ceramics, and the study reached conclusions that it is necessary to review the gas price in order to save this industry.

Reducing the energy price for industry is considered a vital requirement, as the price of supplying natural gas to industry decreased from 5.5 US dollars per million British thermal units to 4.5 US dollars, and electricity prices were reduced by 10 piasters per kilowatt hour in March 2020, in addition to fixing electricity prices for industry. For a period of five years, and here are these measures to confront the repercussions of the Coronavirus, in addition to supporting the productive sectors, but these measures, despite their importance, need other steps.

Dr. Alia Al Mahdi, head of the Egyptian Iron and Steel Association, indicated in an article published on June 21, 2020 in Al Youm Al Sabea newspaper, that Egypt has many potentials that qualify it to become the leader of the steel industry in the Middle East and Africa, noting that the current productive capacities of the Egyptian iron and steel industry have reached about 15.6 million tons in 2019, which represents about 36% of the available production capacity on the African continent.

She added that the productive capacities of the Egyptian iron and steel industry, the Arab industry, acquired about 26% of the total productive capacities of the Arab iron and steel industry in 2018, and pointed out that the iron and steel industry employs direct labor estimated at 31 thousand workers, “of which 27500 workers are in the integrated and semi-industrial industry.” Integrated and 3500 workers in the rolling mill industry », this is in addition to tens of thousands of indirect workers working in many sectors and economic activities that form front and back push links for the iron and steel industry, such as transportation, construction, cars, household appliances … etc.

Despite all these huge manufacturing capabilities, energy-intensive industries, including iron and steel, suffer from high costs due to the high gas price, and this negatively affected Egyptian exports to this sector, as exports declined during the first five months of 2020 by 43% compared to the same period. From the previous year, the equivalent of $ 207 million, according to data available from the Export and Import Control Authority.

With regard to the comparison between the price of gas for the industry in Egypt compared to other countries, a report by the Egyptian Steel Association revealed that the iron and steel industry in Egypt is accounted for at $ 4.50 per million British thermal units, which is more than double the price of its supply to industry in both Europe and the United States. The amount of US $ 1.4 and 1.8 billion British thermal units, respectively, and therefore the national steel plants were charged with additional costs estimated at about $ 3.2 billion during 2019.


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