Gov’t deepens industrial gas rationing, raising curtailments on fertilizer and methanol plants to 33% and notifying Ezz Steel of a 30% cut

The government is deepening its rationing of industrial gas, raising curtailments for fertilizer and methanol plants to 33% as surging global LNG import costs force it to trim the fuel it can afford. Mopco is the only producer so far to confirm the higher level in a bourse filing (pdf) yesterday. Abu Qir Fertilizers and Egyptian Chemical Industries (Kima) have confirmed only the 20% imposed on 1 November, which Kima set out in its latest EGX disclosure (pdf). Abu Qir has flagged contingency plans to manage inventory and reschedule maintenance, but none of the three has put a figure on the loss.

The supply crunch has also spilled over into metals: The government has notified Ezz Steel, the country’s largest steelmaker, of a 30% gas supply cut from yesterday, equal to about 30 mmcf / d, Asharq Business reports, citing government officials. The cut has no end date.

The import bill is the reason for the squeeze: The government’s move to trim industrial supply follows a jump in global spot prices. The Asian LNG benchmark (JKM) climbed roughly 36% m-o-m to reach more than USD 34 per mn British thermal units (Btu) at the end of October, up from about USD 25 at the end of September. With a single spot LNG cargo now costing close to USD 120 mn, according to one government official, the government has deferred five of the 15 cargoes contracted for November.

Savings on LNG come at a cost to exports: The plants being throttled are among the state’s strongest export earners, and they’re being cut just as their prices peak. Granular urea is fetching about USD 535 a ton FOB for November contracts, up roughly 17% from September. Fertilizer exports earned USD 2.53 bn in the first nine months of 2026, part of a USD 9.54 bn chemical and fertilizer export book that was up 34% on the year. With Egypt able to make about 6.5 mn tons of urea a year and consuming 2.9 mn tons at home, that leaves roughly 3.6 mn tons to sell abroad.

“The state is facing a difficult decision: either import LNG at this high cost and pass it on to the industrial sector, or reduce imports and cut supplies to factories while calculating the least damage,” Hassan El Marakby, chairman and CEO of El Marakby Steel and vice-chairman of the Federation of Egyptian Industries’ metallurgical industries chamber, tells EnterpriseAM.

Still, he says the cuts haven’t spread across the whole steel industry: Formal curtailment notices have stayed concentrated on petrochemicals and fertilizers, which he calls the heaviest industrial gas users. By his account, nothing formal has reached the mills — including Ezz Steel, where he has no confirmation of the reported 30% cut — and he expects the cuts to widen if the energy crisis worsens.

Who’s next in line comes down to gas intensity: Fertilizer plants are the industrial sector’s heaviest users by far at 207.7 bn standard cubic feet (bscf) in FY 2024/25, or about 39% of the gas Egyptian industry consumed, against 82.4 bscf and roughly 15% for iron and steel, according to data from the Egyptian Natural Gas Holding Company (pdf) cited by Egypt Oil & Gas. Petrochemicals come next, since they also use gas as a feedstock. Industry takes about a quarter of the national gas supply; power generation takes the rest.

Why steel has more room

The two cuts don’t bite the same way, and El Marakby’s case is that steel comes off lighter. Gas is an irreplaceable feedstock for fertilizer and petrochemical producers — ammonia and urea cannot be made without it — so a physical cut forces plant run-rates down at once, throttling export sales even though fertilizer’s own export prices would have absorbed the higher gas bill. Domestic steelmakers, on the other hand, use gas primarily as a reducing agent in Direct Reduced Iron (DRI) units rather than as an essential chemical raw material, allowing mills more room to adjust upstream operations.

Operational flexibility also insulates the steel industry: Fully integrated mills run DRI units so a gas cut hits DRI output first, and electric arc furnaces can then take up the slack by rebalancing their charge toward scrap. “A clear distinction must be made between the two types of plants,” El Marakby explains. The impact is concentrated on fully integrated producers — Ezz Steel, Suez Steel, and Beshay Steel — which account for the bulk of gas use in the metals sector. Semi-integrated mills run on scrap-fed electric arc furnaces, use minimal gas, and are largely insulated.

But that flexibility has limits: El Marakby dismisses the notion that steel mills are sitting on excess inventory that could help absorb fuel cuts painlessly. “Current factory production is already calculated and adjusted to meet existing domestic demand and export orders without any significant surplus,” he explains. “Any reduction below this current level will have a definite negative impact on mills.” Mills can still protect finished rebar and coil volumes by importing more scrap metal, merchant DRI, or hot briquetted iron, he says, but that puts fresh financial pressure on them, driving up their demand for foreign currency to fund the shipments.

DATA POINT- Ezz Steel produced roughly 6.4 mn tons of crude steel in 2024, holding an annual design capacity of around 7 mn tons across long products (4.7 mn tons) and flat steel (2.3 mn tons).

We’ve been here before: The government has repeatedly turned to rationing natural gas supplies to heavy industry during previous energy pinches, most recently during the energy crunch of summer 2024, when gas supply disruptions forced fertilizer and petrochemical producers to halt production and triggered nationwide curbs.