Billet traders in Egypt are expecting business to slump, as the Egyptian government signed an order to ban steel billet trading in the country. Discussions between government agencies, integrated steel producers and independent re-rollers lasted for months before the government decided to enforce the ban. The order, signed on March 3 and effective from March 4, prohibits traders from importing billets into Egypt but allows independent re-rollers or companies with rolling mills to directly import billets.
The decision for the ban stems from mid-2017, when the Egyptian authorities enforced temporary import tariffs of rebar steel from China, Ukraine and Turkey. The authorities extended the tariffs for five years at the end of 2017. The import tariffs helped the authorities to control the rebar imports into Egypt, but billet imports continued unabated due to local independent re-rollers importing billets to roll into rebars. Their actions affected the pricing of rebars that the integrated steelmakers in the country set. Due to the price adjustments, those companies requested an increase in rebar duties, as well as duties on billets. The re-rollers in Egypt were distressed by the requests of the companies, as it increased their costs. The government’s ruling to allow re-rollers to import billets has benefited both parties.
CRU, business intelligence on global metals firm, has investigated the impact that re-rollers had on billet imports. Current processes allow re-rollers to import billets themselves or through agents that have end-use certificates. However, many re-rollers lack expertise in the import and trade game, and the change has proved challenging for management of these companies.
Further reading about steel is available at The Battle of the Bodies: Steel vs. Aluminum in Automotive Production.