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Report on the iron and steel industry in Egypt

Report on the iron and steel industry in Egypt

 

The iron and steel industry is closely linked with the rate of economic growth, as Egypt’s economic growth rate reached 5.6% in 2019 compared to 5.3% in 2018, driven by the growth of gas extraction, tourism, and real estate sectors, in addition to rising exports.

 

 

It is expected that the growth rate in Egypt will record a growth of 2% in 2020 due to the negative effects of the Coronavirus pandemic, especially through its impact on local production, trade, tourism and remittances of expatriates and immigrants.

 

 

Types of steel production companies in Egypt:

 

 

1- Integrated companies: It produce from extractive raw materials to the final product, such as: –

Prepared by Eng. Khaled Makhlouf
Head of the technical sector, the Holding Company for Metal Industries

Helped in preparing Accounting Fatima Morsi

 

Ezz El-Dekheila Company in Alexandria, which depends on imported materials with high specifications (and produces DRI). It produces all shapes and specifications of rebar (in addition to an independent HRC production line), and the same is the Suez Steel Company and Beshay Steel Company for the production of rebar.

 

 

2- Semi-integrated companies: It produce the final product from smelting scrap (or Pig iron) such as Al-Maraky Steel, ARCO Steel in Sadat city and Delta Steel, Taibeh Steel and Egyptian Steel Company (for the production of steel billet only).

 

 

3- Rolling mills only, such as: Med Steel – Ayyad Steel – El Ashry Steel.

 

 

The problems facing the iron and steel industry:

 

 

* The iron industry faced many problems, the most important of which was the rise in energy prices – also unfair competition with imported iron, as the market was flooded with imported iron, especially from Turkey, Ukraine and China at prices below the cost of its production. The idea of ​​dumping is based on removing local production from the selling process, through the erosion of the marketing share of the local product in favor of the imported product, which leads in the medium and long term to heavy losses for the local manufacturer, so that he is forced to close his industry or sell it to the foreign investor at any price.

 

a result of the companies supplying Egypt obtaining export subsidies from their countries.

 

 

* Abolition of protection fees, and consequentl

 

y the expansion of iron imports, which leads (in addition to the increase in the withdrawal of the dollar and the increase in the hard currency crisis that the local market suffers from) to compete with the local product. Therefore, the Ministry of Commerce and Industry issued in October 2019 a decision to impose final, gradual preventive fees on imports. Of some types of iron and steel products for a period of 3 years, as follows:

 

 

* Fees were imposed on rebar at rates of 25%, with a minimum of $ 125 per ton, from October 2019 until April 11, 2020, to decrease to 21% with a minimum of $ 105 per ton from April 12, 2020 to April 11, 2021, and 17% with a minimum of $ 85 Per ton from April 12, 2021 until April 2022.

 

 

* As well as the billet, fees were imposed at rates of 16%, with a minimum of $ 74 per ton, from October 2019 until April 11, 2020, to decrease to 13% with a minimum of $ 60 per ton from April 12, 2020 to April 11, 2021, and 10%, with a minimum of $ 46 Per ton from April 12, 2021 until April 11, 2022.

 

The production capacities of iron and steel factories in Egypt

 

 

• Egypt has steel factories that enable it to produce more than 12.96 million tons of Crude Steel (after excluding the Egyptian Iron and Steel Company, which relies on blast furnaces to produce locally extracted ores). Ezz Steel Group produces 5.4 million tons, with 42% of production This is followed by the Suez Steel Company, with a quantity of 2.4 million tons, or 19%, then the Beshay Steel Company, with a quantity of 2.0 million tons, or 15%, and the Egyptian steel Company, with a quantity of 1.6 million tons, or 12%.

 

 

• The production capacity of direct reduced iron is 8.9 million tons, DRI. Ezz Steel Group holds the largest part of the production, with an amount of 5,000 million tons, or 56%.

 

• The production capacity of billet is 10.96 million tons, of which 3.4 million tons are for Al Ezz Group companies at a rate of 31%, followed by the Suez Steel Company with 2.4 million tons or 22%, Beshay Company with 2 million tons by 18%, and Egyptians Steel 1.6 million tons by 15%.

 

 

• The production capacity of long products (reinforcing steel) is 15.0 million tons, of which 4.0 million tons are for the Ezz Group by 27%, the Suez Steel Company with 2.2 million tons at a rate of 15%, the Beshay Steel Company with 2.0 million tons with a rate of 13% and the Egyptian Steel Company 1.7 million tons by 11%.

 

 

• The production capacity of HRC is 2.0 million tons for Ezz Steel Group, and the capacity for CRC production is 0.820 million tons, of which 0.620 million tons are for Kandil Steel Company, by rate of 76%.

 

• The total production capacity of EAF steel furnaces is estimated at 12.9 million tons, which is greater than the production capacity of DRI units, which is estimated at 8.900 million tons. The rest of the smelting entrance is completed from scrap.

 

 

Egypt imported 1.650 million tons of scrap in 2019, while it imported 1.550 million tons in 2018, with a growth rate of 6%.

 

 

• It is noted that the production capacity of billet (10.960 million tons) is less than the capacity of rolling by about 4 million tons, and due to the fact that the capacity of the billet is originally not utilized due to the high operating costs locally compared to the prices of imported billets, which led to an increase in the imports of billet in previous years.

 

 

Egypt imported 2.3 million tons of billet in 2019, while it imported 3.4 million tons in 2018, a decrease of 33% due to the imposition of protective duties on imports of imported billet $ 74 per ton at the beginning of 2019

 

Delta Steel Company project for billet production

 

 

– A project to develop and qualify furnaces to produce 500 thousand tons of billets annually (induction furnaces + continuous casting). It is divided into two phases, each phase with an investment cost of approximately $ 9.6 million:

 

 

– The first phase of 250 thousand tons per year, the civil works and the installation of production units and equipment were completed, and the operating trials began in December 2019.

 

 

– A second phase of 250 thousand tons per year, the contract was contracted and the accreditation opened, and 90% of the equipment was received so far 2020, while waiting for the arrival of the remaining equipment and the presence of Chinese technicians for installation.

 

 

– Each stage of the project consists of two melting units with electromagnetic induction technology of 25 tons / unit capacity and a ladle furnace. It works by means of electric arc as well as a continuous casting unit CCM (3 lines) for the production of billets and each induction furnace consists of 2 crucibles (crucible in operation and another in maintenance to change Liner)

 

Billets production in Egypt

 

 

• Billet production capacity is 10.96 million tons (after taking into account the technical condition of some factory equipment, such as the Egyptian Iron and Steel Company), including for the Ezz Steel Company with a volume of 3.4 million by 31%, then the Suez Steel Company with a volume of 2.4 million tons, by 22% and Beshay Company of 2 million tons by 18% and Egyptians Steel 1.6 million by 15%.

 

 

– The actual production of billet does not exceed 50% of this energy, although we use an average of 8 million tons of billet per year to produce reinforcing steel. Therefore, Egypt’s actual production of billet is about 4 million tons per year, and 9 factories are operating in Egypt for the production of billets, noting that 80 % Of rebar manufacturers in Egypt produce their own billet.

 

 

We note that the billets production capacity is less than the rolling capacity by about 3 million tons and due to the fact that the billets capacity is originally not utilized due to the high operating costs compared to the imported billets prices, this led to an increase in billets imports – Egypt imported a volume of 2.3 million tons of billet in 2019 while it imported a volume of 3.4 One million tons in 2018, a decreased by 33%, due to the imposition of protective duties on imports of imported billets of $ 74 per ton at the beginning of 2019.

Scrap in Egypt

 

 

– Since the total production capacity of EAF steel furnaces in Egypt is estimated at 12.9 million tons, which is greater than the production capacity of DRI units, which is estimated at 8.9 million tons. Therefore, the rest is completed from scrap and according to the data of the Chamber of Mineral Industries, Egypt imported a volume of scrap in 2017 amounting to 2.9 million tons, then the volume of 3.3 million tons of scrap during 2018, an increase of about 14%, while the volume of 3.6 million tons was imported in 2019, a rise of 9%, and 1.4 million tons were imported in the first half of 2020.

 

Production of rebar in the Egyptian market:

 

 

Reinforcement steel is considered the most influential building material on the movement of the real estate market in Egypt, but in the whole world, as it is the backbone of contracting and construction, and given that it is the component with the largest proportions in concrete works and building population centers, according to the engineering used in the current era of construction, which depends on two basic elements They are iron and concrete, meaning “cement”.

 

 

Egypt’s production of rebar in 2019 amounted to 7,479,000 tons, compared to 8,119,000 tons in 2018, a decrease of 8%, while the total production for the first half of the first year of 2020 was about 3,570,000 tons, roughly equal to what was produced in the first half of the previous year 2019 Its quantity is about 3,579,000 tons.

 

 

Sales of rebar in the Egyptian market (sold production): –

 

 

The sold production (total sales) of rebar, which is the final product of billet in 2019, amounted to 7,453,000 tons, while the sales in 2018 almost represented the same amount of 7,449,000 tons.

 

 

Domestic sales of rebar

 

 

Domestic sales of rebar in Egypt in 2019 amounted to 7,230,000 tons, while domestic sales in 2018 amounted to 7,207,000 tons, a slight increase of 0.3%, and local sales in the first half of 2020 amounted to 3,285,000 tons, down from what was sold in half The first of 2019, with a rate of 0.9%, which was about 3,567,000 tons.

 

 

 

Rebar exports

 

 

– Egypt’s exports reached 223,000 tons of rebar in 2019, while exports reached 242,000 tons in 2018.

 

 

 

Imports of rebar

 

 

Imports reached 123,000 tons of rebar in 2019, while imports were 138,000 tons in 2018.

 

 

 

Apparent consumption of rebar

 

– The apparent consumption of rebar in 2019 witnessed a quantity of 7,353,000 tons, while the consumption in 2018 represented almost the same consumption in the amount of 7,345,000 tons, despite the continued acceleration of the implementation of major projects (the new administrative capital, the new city of Alamein, subway lines, housing projects. Industrial zones, roads and bridges) in addition to imposing protective duties on linear products helped increase demand for local production and reduce factory stocks.

 

 

 

– The demand for steel in the first half of 2020 continues at the same pace as the previous year, due to the political leadership’s insistence on continuing major projects in order to achieve a positive growth rate despite the conditions that the world is going through for the Corona pandemic.

 

 

Steel industry challenges, and the reasons for the rise in rebar prices: –

 

 

The iron and steel industry has witnessed many challenges during the last period, represented by a decrease in operational capacity as a result of: –

 

* High natural gas prices for iron and steel factories.
* High electricity prices.
* The crisis of the dollar shortage and the inability of factories to procure hard currency forced companies to resort to obtaining them from the parallel market, in some periods.
* High prices for imported billet ore.

 

 

The most prominent producers in the iron market in Egypt: –

 

 

Market experts unanimously agree that the most prominent producer in the iron market in Egypt is the Ezz Steel Group, which alone owns more than 50% of the total production volume of iron in Egypt, with a total production volume in 2019 of about 4.8 million tons.

 

 

Arab Steel Magazine