New Materials research report from Business Monitor International is now available from Fast Market Research
Boston, MA -- (SBWIRE) -- 03/01/2013 -- BMI's Egypt Metals Report for Q113 examines the impact of political developments on domestic demand and output in 2013 and in the medium-term (2013-2017). The report examines the influence of the weak Egyptian pound on the sector and whether depreciation is sufficient to compete in an over-supplied regional market. It also examines the promise of expansion in primary aluminium smelting with Egyptalum seeking to expand production to 400,000 tonnes per annum (tpa). The report also analyses the trends in export markets, particularly in relation to the surge in steelmaking in the Arabian Gulf region.
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In the first 10 months of 2012, base effects led to 2.7% growth in crude steel output to 5.56mn tonnes (mnt). However, flat and long sales on the domestic market were sluggish with rebar at very low levels due to a climate of uncertainty around the elections as well as a slowdown in activity associated with Ramadan. BMI is confident that as the civilian democratic government finds its feet, investment and manufacturing activity will pick up in the months ahead, which should support the upward domestic production trend going forward.
For 2013, BMI forecasts Egyptian steel production to grow by 7.0% year-on-year (y-o-y) to 7.22mnt, off the back of greater investment in expanding production capacity and greater stability in the country following the 2012 presidential elections. We expect domestic demand for steel in Egypt to grow by 8.0% y-o-y to 10.96mnt in 2013.
In addition to more favourable market dynamics, BMI's forecast for 2013 is supported by Elmarakby Steel's plans to open its first meltshop to produce steel billets from scrap by end-2013. The 350,000tpa EAF in Giza will feed an existing 240,000tpa rolling mill, with the remainder exported or sold on the domestic market. The country has been operating well under full capacity, with a utilisation rate under its 8.8mntpa potential. Even without further capacity expansion, Egypt has the potential to grow by more than 30% from 2010 levels, using plants that are currently in operation.
Over the last quarter, BMI has revised the following forecasts/views:
- Despite political instability forecast over the short term, BMI forecasts annual crude output to reach 11.49mnt by end-2017. Although the production deficit will slowly shrink during our medium-term forecast period (2013-2017), we see Egypt's steel consumption reaching 14.91mnt in 2017, meaning imported steel will be needed to meet demand. Nevertheless, BMI still sees the shrinking deficit as a positive, given the depreciatory trend of the Egyptian pound.
- Egyptian crude steel output should grow by a rather impressive 7.0% in 2013 to 7.22mnt, with steel production expected to surge by a staggering 30.0% in 2014 once new smelters come online by end-2013.
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