New Egyptian directive restricts billet imports

Posted on 11 March 2019

Source: Kallanish

Egypt's trade and industry ministry has issued a directive permitting only entities with a manufacturing licence to import billet. This effectively cuts out traders who have provided the lion’s share of billet imports into the country, due to trade finance complications caused by mills' inability to issue letters of credit.

The directive, which came into effect last week, also aims to stamp out possible speculation, as import volumes for each licensee will be determined by their rebar production capacity. Those traders with open deals will be allowed to complete transactions, along with those who made some pre-payment.

Rebar mills in Egypt have been relying on imports of billet in the absence of sufficient steelmaking capacity in the country. Most billet imported into Egypt comes from the CIS. Egypt has historically had long-term off-take agreements with both Ukrainian (ISD, AMKR) and Russian (Novorosmetal) mills. Egyptian re-rollers would import up to 300,000 tonnes/month of the semis several years ago, before new production capacities were launched. They were thus a major driving force behind the CIS billet export market.

Turkish billet has also recently found its way to Egypt, but to a lesser extent as it was only recently that Turkish and CIS billet equalled in price. Traditionally, Turkish billet has been $30-40/t more expensive. Egypt's total imports of billet amounted to around 2 million tonnes in 2018, sources tell Kallanish.

There were different reactions to the new directive from Egypt's market participants. Some hail the new rule as a saving grace for the country's re-rollers, who were held hostage to moneyed billet traders. These traders would undercut the re-rollers with tolled rebar sold at much lower prices. Others say not much will change, but agree re-rollers will have more power to regulate inflows. “The producers will know best and probably let traders import billet under their licences,” one source opines. “It’s mainly about managing the cycle.”

That re-rollers will need to continue to rely on traders is without doubt. The ministry has so far not issued any directive on how it is going to support them with hard currency cash flow. Traders say more "…blind trust" will be required from them to continue working under the new directive. 

«  Back

Copyright © 2016 SEASI Site. All Rights Reserved.