Natural gas prices for industry increased at the beginning of the month as per Decree 1306/2026 announced by Prime Minister Mustafa Madbouli. The decision was made as a result of soaring global energy prices, which have sharply increased Egypt’s natural gas import bills in recent months.
The announcement comes at a time when the government wants to rationalise energy subsidies under the economic reform programme agreed with the International Monetary Fund.
Egypt’s fuel-import bill has been steadily rising since the outbreak of the US-Israeli war on Iran on 28 February this year. Madbouli said in March that monthly import costs had surged from around $560 million to $1.65 billion due to regional geopolitical tensions and rising global prices.
Ahmed Al-Zeini, a member of the Building Materials Division at the Egyptian Chamber of Commerce, lauded the government’s decision concerning energy prices for the industrial sector.
He noted that there have long been calls for energy-intensive industries to adopt global pricing mechanisms, provided that a free market allowing exports while also supporting the domestic market is maintained in order to benefit from international price movements.
He explained that when global energy prices rise, local prices should follow, and when they fall, domestic prices ought to drop as well. In practice, however, producers and distributors quickly pass on international hikes in prices but rarely mirror declines, leaving local prices disproportionately high.
However, observers fear that the increase in gas prices places a direct burden on production costs, as natural gas is the main production input for industries such as steel and nitrogen fertilisers, and that it will consequently push up prices causing inflationary pressures.
Egypt’s economy during the first quarter of 2026 reflected mixed movements across key monetary indicators, amid persistent inflationary pressures and a shift by the Central Bank of Egypt (CBE) towards a relatively flexible monetary policy.
The CBE maintained interest rates unchanged during its April meeting at 19 per cent for deposits and 20 per cent for lending, following a one per cent cut in February, the first reduction in 2026.
Meanwhile, annual inflation slightly eased in April to 14.9 per cent after two months of increases to reach 15.2 per cent in March driven by rising food, services, and non-food commodity prices, according to figures by the CBE and the Central Agency for Public Mobilisation and Statistics.
Out of all the energy-intensive industries that will be paying higher prices for gas, cement factories will pay the highest price. Gas supplied to these have risen from $12 to $14 per million British thermal units (Btu), soaring by 16.6 per cent.
Meanwhile, iron and steel plants, along with fertiliser and petrochemical producers, saw the highest gas price climb, rising from $5.75 to $7.75 per million Btu, an increase of 34.7 per cent.
Other industrial sectors have also been subject to gas price increases, from around $6 to between $6.5 and $6.75 per million Btu, an increase approaching eight per cent.
This is expected to be reflected in higher production costs and rising prices for a range of industrial goods.
Although cement producers shoulder the highest price, they are expected to be the least affected by the latest increases. Ahmed Sherine, a member of the Arab Cement Union and former head of the Cement Division at the Federation of Egyptian Industries, ruled out the possibility of rises in cement prices, whether in the domestic market or in exports, as a result of the new gas prices.
Sherine explained that unlike the iron and steel industry where gas constitutes a key production input, cement factories rely on gas primarily as fuel for kilns. Around a decade ago, cement producers began shifting towards alternative fuel sources in coordination with the ministry of the environment, including coal and waste-derived fuels.
As a result, only a limited number of cement factories connected to the natural-gas grid still resort to gas on a restricted scale because of its high cost. Consequently, Sherine said, the latest pricing decision is unlikely to lead to further increases in cement prices.
With all cement plants running at full capacity and some lines rehabilitated after a quota initiative was scrapped in late 2025, the market has shifted to a free system governed purely by supply and demand, he said.
According to a source familiar with coordination procedures between representatives of building materials at the Federation of Egyptian Chambers of Commerce and the Federation of Egyptian Industries, no immediate increases in steel prices are expected despite higher gas prices and its importance as a key industrial input.
The source explained that April witnessed price hikes by all steel producers through successive official statements issued by the local steel producers.
The hikes, the source suggested, were likely carried out through unofficial coordination between the government and producers. If this assumption proves accurate, the government had acted wisely in order to avoid sudden shocks in building material prices that could trigger speculative activity in the market and fuel inflationary pressures affecting the construction and housing sectors, he said.
Meanwhile, Egyptian fertiliser prices are approaching their previous historic peak of $1,000 per ton, recorded during the 2022 Ukrainian crisis.
Export prices for Egyptian fertilisers have surged by around 90 per cent compared to levels recorded before the war on Iran, with prices exceeding $800 per ton, up from the $420 to $450 previously, stated members of the Fertilisers Chamber at the Federation of Egyptian Industries to Al-Arabiya Business and Reuters.
Amid rising European demand for Egyptian fertilisers, the government imposed new duties on nitrogen fertiliser exports amounting to $90 per ton for a period of three months under a decision issued by the minister of investment and foreign trade and effective from 5 May.
The move aims to regulate the local market and ensure adequate domestic supply.
As for other industries that have experienced smaller increases of less than $0.5 per million Btu, Sherif Al-Sayad, chairman of the Export Council for Engineering Industries, ruled out significant price increases in the engineering industries sector, noting that this falls outside the category of industries heavily dependent on natural gas consumption.
* A version of this article appears in print in the 21 May, 2026 edition of Al-Ahram Weekly
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