High cost of steel may be caused recession
Ezz Steel said it raised its steel rebars price by 5.3%, to $714.3 per tonne (LE4000) in December on the back of global rises and the hike in imported input prices of billet.
The leading market producer said that price will range between 4120 EGP and 4150 EGP for consumers, the company said. Other producers on the market, heavily depedant on imports of billet, usually follow Ezz Steel trend.
Ezz attributed the increases to the current price of billet which recorded $580 per tonne with a $50 rise from October.
Turkish steel, the flagship of Egypt rebar imports reached $620 per tonne against $580 in October.
Most of Al Ezz revenues come from the local market, while exports account for 16% of revenue. "Ezz Steel continues to generate the largest portion of its revenues in its growing domestic market, where we enjoy a leading position," said the company in a statement after the annoucement of first half results.
In first half of 2010, global steel demand has started to show signs of recovery, which contributed to improve financial performance in first half of 2010. Revenues have increased 17% year-on-year and net profit was up 150% on H1 2009.
“Raising prices is a wrong decision," said Wael Al Nahass, a financial analyst. "Al Ezz Steel should have his eyes on the Global market. China is to face high inflation with decreasing demand. The construction sector will ease and Chinese world imports might be cut by half, this includes steel too," he added, explaining the drop in Ezz Steel's share price from 19.5 EGP to 18.4 EGP on Tuesday.
With a total actual capacity of 5.8 million tonnes of finished steel per annum in 2009, Al Ezz Steel is the Egyptian market leader in terms of sales, with a market share of more than 46%.
(Additional reporting Salma Hussein)