Steel mills in Egypt halt production 8 hours per day due to electricity outages
The Chamber of Metallurgical Industries, part of the Federation of Egyptian Industries has said that steel mills are unable to bear the additional burden of the government’s planned rise in energy prices, complaining of already deficient supplies of gas and ongoing electricity outages.
Mr Gamal Al Garhy chairman of the Chamber Metallurgical Industries and of Suez Steel said that “Steel mills are shut down practically one third of the day because of electricity outages, and there is a significant shortfall in the supply of gas.”
In remarks made during a visit to the Suez governorate last week Prime Minister Mr Ibrahim Mehleb announced the government’s intention to raise the price of energy for energy-intensive industries that have not seen price increases during the latest period, most notably steel.
Mr Al Garhy said that “The price of gas for steel mills is currently USD 4 per million BTUs, up from USD 1 to USD 2 before the revolution. Electricity prices rose from EGP 0.11 per kilowatt to about EGP 0.46. Suddenly raising energy prices in a haphazard way hurts companies that have loans and financial obligations they need to repay.”
He said that the steel industry is different from the cement industry, which currently receives its gas at USD 6 per million BTUs, because most of the cement industry’s raw materials are local, whereas steel factories import raw materials from abroad at high prices. Since they purchase the materials in dollars, the steel factories also have to contend with continuous price fluctuations. Better supplying companies with gas and electricity regularly and helping them achieve full production capacity should precede any increase in energy prices.”
Mr Mohamed Hanafi DG of the Chamber of Metallurgical Industries said that “Factories with furnaces for smelting will be affected the most by rising gas prices especially the plants in Dakhlia, Beshay and Suez and all factories will be affected if prices of electricity are increased. There has been a problem in supplying gas to the factories since the time of the revolution in 2011 up until now..and plants have been operating at a production capacity of no more than 60% or 70%. Despite not working at full production capacity, plants also suffer from the over accumulation of their inventories, which have reached 150,000 tonnes.
Mr Hanafi said that the 1m housing units project, which the government plans to implement with the Emirati company Arabtec, will not significantly push up demand, as the project is being implemented over 5 years, or approximately 200,000 housing units per year, which only require 600,000 tonnes. This is only equivalent to one month of steel mill production.”
He pointed out that the Engineering Authority of the Armed Forces is coordinating with those responsible for implementing the project so as to rely primarily on domestic steel rather than importing materials for the project. However, for steel distributors importation of steel is important to compete with local producers and prevent their monopoly.
Source – Dailynewsegypt.com