CAIRO: Opening up the market to steel imports and facilitating customs entry procedures is crucial to stabilizing the steel market, experts and steel importers said.
As soaring steel prices recently hit LE 8,000 per ton, some wholesalers and investors figured that it would cost less to import steel from steel-rich countries than it would to buy it locally.
Even after the added customs and shipping costs, it would be cheaper to buy steel from abroad.
However, Khalid, an investor who used to own a steel plant, phoned in to Orbit TV’s “Al-Qaihira Al-Youm Sunday night, saying that his shipment was stopped in customs.
According to Khalid, a ton of steel in the Ukraine costs around LE 5,500. After adding shipping and customs costs, he planned to sell a ton of steel to retailers at a price of LE 6,250, which is significantly lower than current local prices.
So, he decided to import steel from the Ukraine, one of the most distinguished steel-producing countries in the world.
However, the shipment was reportedly stopped at customs in Damietta, “for no apparent reason, he said.
Khalid appealed to Minister of Trade and Industry Rachid Mohamed Rachid and is currently awaiting the ministry’s intervention to facilitate the entry procedure.
The shipment is still at customs, pending approval.
“This incident is exactly why the steel market is unstable, the market is too tight, and we need to introduce more players so that existing ones won’t feel that buyers have no other choice, one steel analyst told Daily News Egypt
Last week, Rachid announced that steel manufacturers will be required to set a fixed selling prices at the start of every month. On Sunday, steel prices for the month of June were announced.
A ton of steel costs LE 6,945 from Beshay Steel; LE 6,995 from Masr El-Wataneya and LE 5,990 from Al Ezz Steel Rebars.
Prices will be monitored by the Ministry of Trade And Industry to ensure that they are applied and “strict consequences will result on those who do not abide by their set prices, the ministry told Daily News Egypt.
Although the new prices are set in a bid to stabilize the market, analysts are wary of the low price set by Al Ezz, which has around 60 percent of the market share.
“A difference of LE 1,000 [between Al Ezz and any other company] may cause a disturbance in market prices and it could be a means of monopolizing the market, said the analyst.
The ministry brushed off the suspicions saying that manufacturers were required to increase their production by 20,000 tons last week to meet the increasing demand and economies of scale could lead to a lower production price for Al Ezz.
The ministry said people should patiently wait for the market to absorb the changes before judging. Meanwhile, analysts remain suspicious and are calling for the facilitation of import procedures to create a true free market.