New Egyptian government directive restricts billet imports

Egypt's Ministry of Trade and Industry has issued a directive allowing only enterprises licensed to manufacture to import billets. This effectively cuts out traders who provided the lion's share of the import of billets into the country due to trade finance complications caused by the inability of the mills to issue letters of credit.

The directive, which came into force last week, also aims to root out possible speculation, as the import volumes for each licensee will be determined by their production capacity. Traders with open trades will be allowed to make transactions, as well as those who have made a prepayment.

Rebar factories in Egypt relied on billet imports due to the lack of sufficient steel production capacity in the country. Most of the timber imported into Egypt comes from the CIS countries. Historically, Egypt has had long-term netting agreements with Ukrainian (ISD, AMKR) and Russian (Novorosmetall) plants. Egyptian producers will be importing up to 300,000 tons /month of semi-finished products a few years ago before new production facilities are launched. Thus, they were the main driving force behind the CIS billet export market.

Turkish billets have also recently entered Egypt, but to a lesser extent, since only recently Turkish billets and the CIS have caught up in price. Traditionally, Turkish billets cost $ 30-40 per ton more. Egypt's total billet imports in 2018 amounted to about 2 million tonnes, the sources say.

There were different reactions to the new directive from Egyptian market participants. Some hail this new rule as a saving grace for the country’s shippers who have been held hostage by the money supply traders. Others say little will change, but agree that skaters will have more room to regulate inflows. “Manufacturers will know better and may allow traders to import the stock under their licenses,” one source said. "It's mostly cycle management."

There is no doubt that videos will continue to rely on traders. The ministry has yet to issue any guidance on how it will support them with hard currency cash flow. Traders say they will need more "... blind trust" to continue working in accordance with the new directive.