Egypt’s steel producer, Ezz Steel, reported a profit in the first quarter of 2024, according to the company’s financial statement. The company recorded a profit of EGP 1.26 bln (USD 26.2 mln), compared to a loss of EGP 2.48 bln in the first quarter of the previous year.
In Q1 2024, the company’s net sales amounted to EGP 50.16 bln (USD 1 bln), up sharply from EGP 27.8 bln in the same period last year. Ezz Steel’s exports reached USD 410 mln in Q1 2024, with HRC exports accounting for USD 274 mln (67pct of the total) and rebar exports totaling USD 136 mln (33pct). This is compared to USD 285 mln in Q1 2023, where HRC exports were USD 191 mln and rebar exports were USD 94 mln.
The groups consolidated steel sales volumes totaled 1.466 mln tons in Q1 2024, up 22pct YoY. Rebar sales totaled around 926,000 tons, while HRC sales amounted to about 540,000 tons.
The company’s domestic sales of rebar increased by 34pct YoY to 692,000 tons in Q1 2024. Ezz Steel’s rebar exports reached 231,000 tons, representing 25pct of its sales, compared to 147,000 tons in the same quarter last year.
Domestic sales of HRC decreased by 49pct YoY to 128,000 tons in Q1 2024, as the company focused on exports. In the given period, the company exported 411,000 tons of HRC, representing 76pct of total HRC sales. This compares to 285,000 tons in Q1 2023 (53pct of HRC sales).
Ezz Steel’s long steel production volumes totaled 1.03 mln tons during Q1 2024, up 44pct YoY. Flat steel output volumes remained stable at 567,000 tons in Q1 2024. The company’s billet output increased to 1.11 mln tons in the given period, up from 745,000 tons in Q1 2023.
Egypt’s rebar consumption increased by 8pct to 1.55 mln tons in Q1 2024. However, the company noted that consumption is still considered low as it comes from a low base. Ezz Steel’s report indicated that Egypt’s domestic HRC consumption dropped by 23pct YoY to 306,000 tons in the given period. The company attributed this to the devaluation of the EGP and a critical shortage of foreign currency, which adversely impacted economic growth and diminished consumers’ purchasing power due to rising costs.
Despite the decline in local consumption, HRC and rebar production in Egypt increased in Q1 2024. Ezz Steel attributed the production growth to local manufacturers using export proceeds to secure the foreign currency required to import raw materials.
The company also expressed concern over surging imports due to less protective measures. Ezz Steel noted that the absence of safeguard measures and other means of trade protection is encouraging unfair competition. For instance, the USA applies a 25pct safeguard tariff on billets, and key producing countries like Turkey impose a 17pct tariff on billet imports, Saudi Arabia 12pct, Algeria 11pct, and Vietnam and South Africa 10pct each as a standard customs duty. In Egypt, the customs duty is zero.
Ezz Steel also highlighted that the country’s HRC imports increased by 21pct YoY to 175,000 tons in Q1 2024, facilitated by low entry barriers. The company noted that in the EU, a duty of 25pct is imposed once a preset quota is reached. The USA imposes antidumping as well as safeguard tariffs totaling 66pct (41pct antidumping on particular countries and 25pct safeguard). In Turkey, the import tariff is 15pct, in addition to a 9pct antidumping duty on particular countries. In Brazil, the standard customs duty is 25pct, while in Saudi Arabia, Algeria, Malaysia, India, and Indonesia, the duty is 10pct. In Egypt, however, the customs duty on HRC is only 5pct.
Ezz Steel has a production capacity of 7 mln tons of flat and long steel products at four fully integrated steelmaking plants in Egypt.
1 USD / 48.07 EGP
