The steel market in Egypt is currently facing complex challenges that require a swift response from companies operating in this sector. Rami Al-Aleemi, a marketing and sales consultant, emphasized that the market no longer operates according to traditional supply and demand mechanisms; instead, it has become more intertwined with risk management and the handling of rapid economic changes.
Several local and global economic factors contribute to the instability in the market, including fluctuations in the dollar exchange rate, the continued imposition of protective tariffs on billet imports, as well as declining production and sales rates, and weak domestic demand. These factors have led to noticeable price volatility and increasing pressure on profit margins, creating a cautious atmosphere among companies.
Market Dynamics and Key Influences
The dollar exchange rate is considered the most influential factor in the cost equation within the steel sector. The industry partially relies on importing billet and some production inputs, which has resulted in increased production costs and pressure on dollar liquidity in the market. Additionally, the import of billet, which has exceeded a value of $1 billion at times, represents an additional burden on the balance of payments, which in turn has reflected in the rising prices of the final product.
The protective tariffs imposed on billet imports, which reach approximately 16.2%, contribute to creating an unstable balance within the market. While these tariffs support integrated mills, they raise production costs for rolling mills, leading to an increase in steel prices in the local market by approximately 2000 to 4000 EGP per ton.
Background & Context
The market experienced a significant decline in production during 2025, with local production decreasing by about 7%, coinciding with an 11.7% drop in raw material imports. This is attributed to a shortage of foreign currency and rising costs, which has put clear pressure on stock levels and increased the market's sensitivity to any sudden changes.
Regarding domestic demand, the market suffers from a relative stagnation, with sales declining by approximately 3% due to a slowdown in the construction sector, the main driver of demand for steel. This is due to rising prices and weakened purchasing power, leading to a clear gap between supply and demand.
Impact & Consequences
The market is characterized by clear price instability, with rapid and irregular movements linked to exchange rate fluctuations. This is due to the absence of a clear vision for future costs, making pricing decisions more reactive and short-term.
Future forecasts until 2026 indicate several potential scenarios. The realistic scenario suggests that the volatility will continue but at a slower pace, with relative stability in production and gradual improvement in domestic demand. Meanwhile, the optimistic scenario hinges on achieving clear stability in the exchange rate and a recovery in the construction sector.
Regional Significance
The steel sector in Egypt is considered a vital sector that impacts both the local and regional economy. Any decline in this sector could affect construction prices and major projects in neighboring countries. Therefore, the stability of the Egyptian market could contribute to enhancing regional trade.
In summary, the steel sector in Egypt is facing a phase that requires a clear recalibration of market mechanisms to achieve a balance between protecting the local industry and maintaining price competitiveness.