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| Ezz Steel September price hike attracts mixed reaction - 08 Sep, 2010 | ||
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Ezz Steel of Egypt has raised its EXW price for steel by EGP 350 bringing it up to EGP 3,950 for September. The Egyptian firm said that its net Q2 profit had more than tripled reaching EGP 136 million versus EGP 37 million in the Q2 of 2009. The firm's optimism, as it predicts that global demand for steel will buoy steel prices until the end of 2010. Mr Paul Chekaiban MD of Ezz Steel said that "As we go forward, despite a general context of sharp volatility we expect demand and prices of steel products to improve gradually during the H2 of 2010." Analysts said that the rise has been widely attributed to the hike in global raw materials especially in the past month and half as well as the finished steel markets. Ms Rita Guindy building materials analyst at Egypt's EGF Hermes said that spot iron ore and scrap prices increased between 12 percent and 18 percent over July average prices, respectively. She said that we were expecting an increase, but EGP 350 was stronger than expectation of EGP 200 increase. The stronger than expected price increase is positive for the company's third quarter margins, especially as their costs will not be as high as we had anticipated. The positive impact will only be realized if the company is able to sell more volumes than they have in the Q2. Ms Guindy described the trend as negative since local steel demand declines during Ramadan and the summer months on the back of the slowdown in construction and real estate activities. Ezz Steel has decided to boost its steel prices in order to pass on the increase in raw material prices to consumers and sustain its margins. She indicated that the company will find it particularly difficult to sell at such high prices, especially in view of the current slowdown in demand coupled with competition emanating from imported Turkish steel. She attributes the inflow of Turkish steel which will be sold at EGP 3,420, being at the root of the cause for the price differential between Ezz's steel prices which will attain EGP 3,950 in September versus the international price of EGP 4,500. (Sourced from Daily News) | ||
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