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Four new companies win steel license to boost production

Four companies granted licenses to increase local production of steel in face of growing demand by the construction sector

Bassem Abo Al Abass and Reuters, Wednesday 29 Dec 2010
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Four new companies for steel and rebars were among the nine to be granted licenses for the production of 2 million tons of iron and 1 million tons of billet, the Industrial Development Authority announced in a press release.

The companies were named as Port Said National Company for Steel, IIC for Steel Plants Management, Al-Marakbi and Al-Wataniya.

"Half of these investments will be located in Upper Egypt," said Amr Assal, chairman of IDA.

Assal added that the production capacity of the factories will soon be announced.

"These companies have a great opportunity," commented Beltone analyst Omar Taha, adding that the market needs new companies to boost local production.

The new plants will start production within at least four years. By that time imports of steel would exceed 2 million tons to cater Egyptian growing demand.

By 2015, the market demand will reach 11 million tons per year, against the 6.5 million tons produced by local factories.

Three of the other competitors who lost out on contracts already own rebars factories. Thefailed bidderswill be invited to enter the next round of bidding to be launched soon, when the required amounts of natural gas are available for this.

They are namely, al-Garhey, Beshay and Rashed who have a collective market share of 55 percent of rebars production according to the chamber for the metal industry. EZZ the Egyptian market leader in terms of sales, has a market share of rebars of 30%.

A boom in construction and infrastructure spending will help drive an estimated 36 percent increase in Egypt's production of reinforcing steel by 2017, an Egyptian steel official told Reuters on December 13.

Brokerage CI Capital said the new licenses would help tackle a domestic shortage of steel rebars and allow property developers to avoid supply bottlenecks.

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