? Following a wave of local price cuts, the domestic iron and steel industry has seen a series of rapid developments that have reshuffled the deck. The price drops — which are more than just the result of recent fluctuations in global raw material prices — are the result of a layered internal struggle between a historic sales slump and heightened competition between producers.

But the decline is not so much a reflection of long term projections as much as it is a short-term correction, particularly as external factors affecting billet and rebar iron prices remain unstable, most notably iron prices in China and demand fluctuations in the GCC market, industry insiders told EnterpriseAM. While the market is quick to respond to these variables, questions remain: What is the true reason behind the recent price cuts? And where is the market headed in 1Q 2026?

Price wars and metal lifeboats: Companies such as Ezz Steel, Suez Steel, El Garhy Steel, and Egyptian Steel lowered their prices by 3-10%, triggering a price point of some EGP 33k per ton. Ezz Steel’s decision to cut around EGP 4k per ton followed the widening price gap between the company and some medium-sized rolling mills, which had maintained prices between EGP 32.5-33k for months, whereas Ezz Steel’s price had remained fixed at EGP 38.2k since October 2024, according to Ezz Steel agent and distributor Islam El Qady. The move is “purely commercial and temporary,” and may be changed at any given time, El Qady said.

Too much iron to handle? The accumulation of a massive inventory — over 600k tons, according to Chamber of Metallurgical Industries head Mohamed Hanafy — seems to be the primary reason for the recent wave of cuts. Factories have also been forced to reduce prices to liquidate and meet financial obligations, Hanafy added. The current reductions, however, including those announced by Ezz Steel, are time-bound, and extend only until today.He explained that these cuts may not be sustainable if they fall below the actual cost of production.

Rusting margins: The recent cuts have shrunk net income margins to “near non-existent” levels, with some companies selling at or below the break-even point, Hanafy told us. The drop in demand has prevented factories from compensating for the lower prices by increasing sales volume, making managing inventory and covering operational costs more difficult, an industry insider told EnterpriseAM.

An alloyed response: Sales for Ezz Steel saw a slight rebound following the cuts, El Qady told us. But sales for other lower-priced producers, including El Garhy steel — whose inventory is estimated at around 50k tons — have not picked up as the market continues to stagnate on account of the reduction of new projects, we were told.

In numbers: Egypt — the largest producer of crude steel in the region, with 14 rebar manufacturing companies — manufactured some 8.7 mn tons in the first 10 months of 2025, marking a 2.8% decline y-o-y, according to data from the Arab Iron and Steel Union. Additionally, rebar production reached 3.9 mn tons in the first half, a 7% y-o-y decline.

A shift towards investment steel: The past few months have seen consumers shift towards investment steel operations, which melt and mold already produced steel, such as that produced by companies like Ayad, Tanta, Misr Steel, and Al Gioshy, due to the price gap with steel produced by integrated mills that also turn raw materials into steel before casting it. At one point, the gap was EGP 5k per ton, prompting many consumers, particularly those with large orders, to switch suppliers, El Qady noted. In an effort to counter this shift, some integrated factories resorted to producing steel with specifications lower than B500DWR to present offerings close to investment steel prices — a move that cranked up the pressure on the competition.

The Egyptian market includes three models, each with its own cost structure. Factories relying on imported billet bear preventive fees of up to EGP 4k; factories working with locally melted imported scrap have costs linked to the global scrap price; and integrated factories — such as Ezz Steel — rely on direct reduced iron (DRI), with costs linked to both raw materials and energy prices. Hanafy further added that the decline in global raw material prices doesn’t necessarily affect final production cost due to other variables such as electricity, gas, wages, and transport. “This explains the persistence of price differences despite the drop in global prices,” he told us.

Energy remains the biggest challenge for the industry: Rolling mills heavily rely on natural gas and electricity, with any adjustment in prices directly impacting final cost. Integrated factories are affected by any change in logistics or operations, despite absorbing volatility better, Hanafy told us. Anticipation of any movement in local energy prices will remain a key factor in determining prices next year, particularly since the government periodically reviews these files as part of the effort to restructure industrial subsidies, an industry expert told us.

Global markets are moving in opposite directions: Chinese production remains at high levels despite Beijing’s attempts to regulate production capacities, and prices there fluctuate within a narrow range. Concurrently, factories in Turkey and across the GCC continue to pass on gradual price increases for billet and finished steel, heeding the call of increased demand, according to an industry expert. As for Egypt, the impact remains direct: any rise in global billet prices pressures the margins of local import-dependent factories, while integrated producers remain in a relatively more flexible position.

Local demand has been stagnant for three years — a sign, for many experts, of a genuine and continued stagnation. Stagnation can be attributed to the state’s reduction in investment spending and new restrictions on building licenses for individuals — another key reason for the inventory build-up. El Qady, however, denied any weakness in demand, deeming it “normal,” and further noting that the largest share of local demand comes from real estate developers, not individuals.

Export crisis worsens amid tariffs: Reliance on exports to offset stagnation has become increasingly difficult due to restrictions imposed by several key external markets for Egyptian exports, such as Europe, the US, Canada, and South Africa, adding further pressure on the sector, Hanafy explained. Egypt’s cast steel exports lost USD 213 mn after dropping 13% y-o-y in the first nine months of 2025, reaching USD 1.4 bn in total, according to data from the Building Materials Export Council. The decline puts additional pressure on factories that depended on exports to clear inventory, forcing them to reduce production to simply meet actual needs, according to sources who spoke with EnterpriseAM.

Regional competition intensifies: The GCC has become a central factor in determining market direction. Saudi Arabia is injecting massive investments into new production capacities targeting regional markets, whereas the UAE is solidifying its presence in finished steel exports, and Turkey is working to regain its export shares following a stint of instability, according to an industry insider.

This shift is putting pressure on the Egyptian market from two directions: Imports have become more price-sensitive to the GCC, leading traders to constantly compare costs. Additionally, Egyptian exports face pressure as regional players barge into the scene with competitive prices, especially in East African markets. That said, our sources suggest Egypt still holds a competitive advantage due to relatively stable labor and energy costs compared to other countries, provided there is an actual production surplus.