Metal and steel companies shift strategies to survive

Daily News Egypt
6 Min Read

CAIRO: This year’s International Metal and Steel Exhibition was a display venue not only for products and technology but also for a range of different coping strategies for surviving the financial crisis.

Like others in the steel production industry, Beshay Steel has been suffering from both lower demand and steel dumping.

“By the end of 2009, the last quarter, we started to feel the crisis. Demand decreased and dumping of the product coming from Turkey affected us very much, said Samy Beshay, head of sales and marketing division at Beshay Steel. “Most of the small factories went out of [business] while Beshay was selling steel [at prices] below the cost.

Keeping prices low, the company has managed to retain its market share, said Beshay.

Smaller producers like Metad Helwan SAE have had to make bigger steps to survive the global downturn. “We had a crisis in the demand of rebars and the prices fell. This is why our company decided to shift our mill’s production from rebars to angles and flat bars, said Diana Faltas, marketing and communications manager for Metad Helwan SAE. After the switch in production, the mill saw its revenue increase.

Angles and flat bars, which are used in the final stages of construction, were in higher demand in the past few months because the construction industry continued work on completing projects rather than starting new ones, explained Faltas.

Metad Helwan is already switching back to rebars production as demand is picking up.

In the steel fabrication industry, Energya has been switching emphasis on different sectors to avoid losses. “For example, in power generation field in 2010 there were a lot of problems with the funding agencies that support the Ministry of Electricity, said Adham Omran, marketing manager of Energya.

Therefore, his company looked to other sectors. “The cement industry will go up because the government issued eight new licenses for cement plants. The oil field is also growing. The government has plans to make three big refineries. The bidding stage will be in the beginning of 2011 and we are looking forward to putting our bid, said Omran.

The strategy of Hassan Allam Sons is to go regional. “We haven’t been affected by the crisis because we work regionally, said Hassan Allam, the operations director of the construction company. He explained that Allam Sons has expanded to Saudi Arabia and Algeria which, in his opinion, are the largest two active construction markets in the MENA region. Both of these countries are large gas and oil producers with a focus on infrastructure and industrial development. In the long run, Hassan Allam will probably expand into another infrastructure-hungry market: Africa.

An offshoot of the steel industry, the stainless steel sector, has adopted yet another strategy. “We are trying to get a bigger market share by trying to cover all the needs of the market. It’s very important to diversify in order to give the customer what he needs, said Amrou Farag, Chairman of Suez Stainless Steel.

In coping with the current economic situation, all companies looked up to the government in different ways. For Allam Sons, the three stimulus packages were very important. “The majority of our business is done with the Egyptian government and we have benefitted greatly from the stimulus packages they launched. We have been awarded major infrastructure and power-plant construction contracts in the past month. We are luckier than others in the region because our government has taken the initiative and is spending its money properly, said Allam.

Steel producers like Beshay, on the other hand, are looking for more support from the government.

“Here the government, instead of imposing taxes on the importer, is imposing taxes on us through the utilities. So where is the support for our industry? said Beshay, giving Turkey’s subsidies for the steel industry as an example.

Yet others, like Suez Stainless Steel, were looking for more transparency in the government’s industrial planning. “We need to know what they are thinking. If we don’t know what they are planning to do to, we cannot adjust our investment to what they are doing. Only a few people know what is happening, said Farag. He is also hoping that the government will impose stricter regulations on the quality of imported raw materials.

Despite the slowdown of the market, the steel industry companies were overall optimistic about the future.

“We will start seeing recovery more likely in 2011 than in 2010. I think 2010 will be a slow year, said Allam.

Farag had a similar prognosis, “I think we need one or two years to recover to the levels of before. It’s not because of the instability of the market here, but because of the instability around us.

Share This Article
Leave a comment