Ezz Steel has announced its intention to establish its second melt shop in a few months’ time and expects it to become fully operational by early 2023.
The new project costs nearly EGP 3bn, EGP 1bn of which is in equity and EGP 2.3bn in loans to finance the equipment and part of the working capital.
The melt shop is expected to add a range of 1.5mn tonnes to the company’s capacity. The company plans to continue to export about 10% of its long production, mainly wire rods, as they are used internationally in various industries.
Ezz Group’s total production volumes reached 5mn tonnes in 2021, out of which almost 3 million tonnes of rebars and 2 million tonnes of flat steel. The group currently has only 13,000 tonnes of steel rebars in inventory.
The consumption of rebars in Egypt has increased from 6.8 million tonnes in 2020 to 7.4 million tonnes in 2021 and is expected to reach around 8 million tonnes in 2022.
A source in Ezz group said that the management sees more room for growth in the coming years, especially if supported by growth in local logistics and market liquidity, confirming that steel consumption per capita in Egypt is on the low side compared to any comparable country.
The expected growth in local consumption is triggered by national mega projects currently taking place — like the Decent Life Presidential Initiative — that is expected to increase steel consumption by about 1.25 million tonnes a year, where the effect of the project was considerable in the fourth quarter of 2021.
Another growth catalyst is the end of the suspension of building permits and the implementation of the new building regulatory framework — which took some time to be acquainted with — implying latent demand.
