Cairo-based investment bank Beltone Financial said that Ezz Steel increasing prices by 9 percent came as no surprise.
In its daily note, the firm reported that Ezz Steel raised steel prices for January 2011 by LE 350 per ton (factory price), brining steel prices to LE 4,350 per ton.
“The news come as no surprise to us, given the increasing pressures flowing in as a result of higher iron ore pellet costs,” Beltone said.
Pellet prices as per Vales’s (the main supplier of ore to Ezz) latest indications, increased by close to 200 percent annually and 30 percent in the third quarter of 2010.
“We expect this increasing input cost trend to have a significant impact on Ezz Steel’s margins in the short term, given the inelasticity of steel prices at a higher rate of pellet costs. Hence, the concurrent increase in steel price is a definite need, in terms of margin sustainability for Ezz, and goes hand-in-hand with the company’s efforts to minimize the increased input cost pressures on margins.”
Steel prices globally are at $740 per ton, almost at the same rate as charged by Ezz in the domestic market, according to Beltone.
