Reserves absorb aluminum price shock, production remains steady: Local engineering factories are currently relying on their raw material inventories to absorb the recent jump in aluminum prices, which pushed them to record highs, Mohamed El Mohandes, chairman of the Chamber of Engineering Industries, tells EnterpriseAM. Production remains unaffected for now, he told us, ruling out supply shortages provided Egypt Aluminum continues meeting local demand.

Why this matters: Manufacturers face a turning point as low-cost inventories run dry, forcing them to purchase at new prices inflated by the prevailing shipping crisis and production disruptions at major smelters like Bahrain’s Alba. While the geographic route for importing aluminum from India and copper from Russia avoids the Strait of Hormuz, it is no longer cost-effective due to surging prices and logistics premiums.

Small businesses are in dire straits: The recent 9.5% price hike by Egypt Aluminum — to roughly EGP 14k per ton this March — is exerting significant pressure that could lead to partial production halts at SMEs. Unlike larger manufacturers, these firms lack the capacity to pass on price increases or secure raw materials in advance, Metallurgical Industries Chamber Director Mohamed Hanafi told EnterpriseAM.

Compromising on export quality isn’t even an option: The use of “scrap aluminum” is limited to local applications such as doors and windows, while export-oriented products continue to be manufactured from 100% virgin ore to maintain competitiveness, El Mohandes said.

The real hurdle? Shipping costs. Surging transport and ins. costs — which have quadrupled for some routes — represent the primary challenge to trade flows, according to Hanafi.

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