CAIRO: In the ongoing commotion over steel and cement prices, Hisham Talaat Moustafa, chairman of the General Section of Real Estate Investment (GSREI), lauded the government’s recent decisions taken to cool rapidly spiraling prices.
“I believe the government introduced effective procedures to contain the [relentless] leaps in prices of construction material including the cement export ban and steel price caps, Moustafa said.
He pointed out that after the government banned cement exports, prices slid back to around LE 500 per ton, compared to the previous LE 700 to LE 800 per ton.
“The same is true for steel: placing price limits on wholesalers and retailers has helped push prices down, he added.
Since the beginning of the year, a series of upsurges raised construction costs in Egypt some 30 percent pressured by continued spikes in input costs such as iron ore, scrap metal, billets and coal.
Record high price leaps brought steel prices to roughly LE 7,800 per ton and cement to nearly LE 800. Hikes in production prices have prompted the Ministry of Trade and Industry to ban cement exports in late March. The government also amended last April customs duties and lifted tariffs on cement and steel.
The ministry introduced new rules in April that stipulate local steel producers report prices at the start of each week and quote a resale price ceiling to their distributors, retailers and consumers so the ministry can monitor price manipulation.
Last week, Trade Minister Rachid Mohamed Rachid announced that steel manufacturers would be required to set a fixed price ceiling at the start of every month. Consequently, retail steel prices for the month of June were released last Sunday.
A ton of steel sells for LE 6,945 from Beshay Steel, LE 6,990 from Masr El-Wataneya, LE 6,250 from Suez Steel and LE 6,500 from Mitad Helwan. Meanwhile, a ton from Al Ezz Steel Rebars – which controls a solid 65 percent of market share – now sells for LE 5,990.
Steel producers have reportedly vowed to stop trading with their distributors and retailers if they exceed their price caps.
While these procedures have so far been effective, Moustafa said, price hikes are caused by international factors. “Construction prices are rising globally due to several factors such as high energy prices and scarcity of raw material. That is why we are calling on the government to [further] introduce new procedures to curb these relentless upsurges so that [Egyptian consumers] can cope with them, he added.
“Our main objective in Egypt is to push economic growth rates further, but when prices abruptly increase, they adversely affect consumers and their purchasing power, he added.
“However, domestic prices are still relatively cheap compared to other foreign markets. For example, companies like Al Ezz Steel Rebars sell cheaper than international prices. But again, ongoing leaps negatively affect consumer behavior.
Moustafa, who is also chairman of giant real estate developer Talaat Moustafa Group (TMG), softened his tone when speaking of local steel and cement producers after previously ringing the alarm, outlining in a press statement released in March the detrimental effect of such repetitive hikes on the real estate sector.
Moustafa said in the press statement that the GSREI would not overlook escalating prices in steel and cement that will “eventually affect not only the building and construction industries, but also domestic economy and society in general.
He particularly named Al Ezz Steel Rebars prices as being cheaper than international ones despite angry accusations the heads of the two companies exchanged in April over their respective annual financial results.
Heavyweight steel producer Al Ezz Steel Rebars – which has steadily increased its ex-factory prices since January – left its May prices unchanged this month, for the first time in five months, with local reports suggesting that a drop in input costs caused the company to stabilize prices.
