x Abu Dhabi, UAEThursday 27 July 2017

Ezz content to steel itself for a solid year

Rising prices could help to improve subdued sales projections from Egypt's largest steel maker.

Rising prices could help to improve subdued sales projections from Egypt's largest steel maker.

Ezz Steel said it expected to report sales of 3.2 million tonnes this year, about the same as last year, because of the economic crisis. But industry experts believe increased demand and an expected jump in the price of the metal in the first half of next year bodes well for the company.

Steel prices are up more than 25 per cent since the beginning of October and it is trading at $550 per metric tonne on the London Metal Exchange.

Shares in Ezz Steel advanced 0.8 per cent to 18.72 Egyptian pounds.

"I expect an upward trend," said Rehab Taha, a senior analyst at Prime Securities, who has a "strong buy" on the stock.

"The company's sales are likely to be flat because it's got a huge inventory, but sale prices are expected to go up as steel prices and raw material prices go up," she said.

Ezz Steel is expected to reap rewards from this year's reopening of its flat steel factory, which specialises in producing the metal for use in consumer products such as cars and white goods. Its biggest regional market is the construction sector.

"The coming year will be one for strong demand in the construction sector in Egypt, but it depends on the price of imported steel [from Turkey]," said Ms Taha.

Turkey offers its steel at 3,400 Egyptian pounds per tonne and has become a competitive force in Egypt's steel market, accounting for 80 per cent of imports.

But Ezz Steel prices the metal at 3,600 Egyptian pounds per tonne, after it was forced to raise its prices in August to compensate for a tax rise levied on the metal it produces.

The Egyptian government said last month it was considering anti-dumping action against Turkey, while Turkey said such a move would violate the spirit of free trade.

 

fhalime@thenational.ae