CAIRO: Steel costs continued to fluctuate over the weekend, with reports of prices ranging from LE 6,000 to LE 8,000 per ton, despite rules passed by the Ministry of Trade and Industry last week that intended to keep prices much lower, according to analysts and local media reports.
Menna El-Hasnawy, a steel analyst at HC Brokerage, said she suspected some distributors are hoarding to keep prices high. But, she added, this is difficult to prove.
Some of the price discrepancy may be due to the divergence between ex-factory prices set by different companies, some of whom control more steps of the supply chain than others: a ton of steel from Beshay Steel sells for LE 6,300, a ton from Suez Steel for LE 6,250 and a ton from Al Ezz Steel Rebars for LE 5,700, she said.
Goaded by consumer grumbling, Minister of Trade and Industry Rachid Mohamed Rachid issued a statement this week assuring buyers that there are no special taxes or tariffs now imposed on imported steel.
Officials expect steel producers to announce new ex-factory prices within the week, in accordance with government rules that require factories to report prices at the start of each month so the ministry can monitor price gouging.
Though Al Ezz and others have been publishing their ex-factory prices since the start of this year, the mandated reporting is part of a new set of guidelines passed by the Trade Ministry last week that allow producers to quote price caps to their resellers and encourage them to dissolve ties with wholesalers and retailers who do not conform to them.
Al Ezz, Egypt’s dominant steel firm, has boosted its prices every month so far this year as a construction boom-fueled demand spike has squeezed supply and the cost of inputs like billing, iron ore and coal have risen.
Buyers, producers and state officials began accusing wholesalers and retailers of jacking prices to unreasonable levels after consumer prices started rising at a speedier clip than factory prices. Wholesaler margins were getting “really excessive and had to be capped, Al Ezz marketing director George Matta said late last month.
Al Ezz, who pushed the Trade Ministry to pass the new rules, set distribution prices at LE 5,890 per ton and retail prices at LE 5,990 per ton for the estimated 90 wholesalers and 1,000 to 1,100 retailers in their network last week. Representatives from Al Ezz and the Egyptian Competition Protection Authority were unavailable for comment yesterday.
While consumer prices dropped by about LE 1,000 per ton after the new rules came into effect, they have not stayed steady, with signs that not all resellers have halted speculation despite threats from producers and the state.
