🏭 The Industry Ministry is set to meet with 10 major companies, including El Garhy, El Marakby, and El Ashry, to initiate the bidding process for eight new billet production licenses, a source with knowledge of the matter tells EnterpriseAM. A move over two years in the making, the core objective is to localize raw material production and reduce reliance on imports, which have heavily drained the state’s FX reserves, Metallurgical Industries Chamber Director Mohamed Hanafi tells us.

The government will auction the licenses across three production tiers, a move expected to attract considerable investment, our source tells us. Companies are already preparing their financial reserves — Ashry Steel Group Chairman Ayman El Ashry tells EnterpriseAM he has applied for a license to produce 1 mn tons annually, with investments totaling EGP 1.2 bn.

These developments come at a particularly sensitive time as the government seeks to stabilize the prices of end-use goods that rely on steel, such as electrical appliances and automobiles, by ensuring a steady supply of local inputs, Hanafi tells us. Last September, the government imposed a temporary 200-day protection measure on steel and billet imports to protect the local industry following a four-year suspension of lower duties.

However, current domestic production has proven insufficient to meet demand, while imports have become prohibitively expensive on account of duties reaching 16.2% of the cost, ins., and freight value — no less than EGP 4.6k per ton. This has essentially left rolling mills between a rock and a hard place, industry sources tell us. This coincides with the rollout of incentive packages for local manufacturers aimed at accelerating the localization of several sectors, with the engineering and automotive industries at the forefront.

The end goal? To transition from importing billets and rolled sheets to full-scale local manufacturing. Applications are currently being vetted ahead of technical and financial bid submissions in the coming days.

Integrated mills — which handle the process from start to finish — argue that billet imports flooded the market with cheap products, causing losses and eroding margins. Billet imports jumped 10x over five years to reach 1.7 mn tons, costing the state USD 1 bn annually in foreign currency, according to a report from the General Organization for Export and Import Control seen by EnterpriseAM. For these mills, imports are unjustifiable given that local production capacity — some 13.7 mn tons — exceeds local consumption of 7 mn tons.

On the flip side, rolling mills — which purchase and shape billets — have been hard-hit by protection measures and local raw materials shortages, Chamber of Metallurgical Industries Vice Chairman and El Marakby Steel Chairman Hassan El Marakby tells us. Some factories were led to halt operations entirely due to the high cost of imports, he added.

To melt or to roll, that is the question. Figures reveal a significant gap in the risk-reward profiles of the two production models:

• Integrated mills: Face high operational costs as they manage the entire lifecycle from melting to finishing;
• Rolling mills: Rely on a model of purchasing billets and shaping them, allowing for quick gains of EGP 4k-5k per ton when importing.

However, this flexibility comes at a cost. While integrated and semi-integrated mills have a capacity of 13.7 mn tons, rolling mills remain hostage to global market fluctuations and anti-dumping duties. These 16.2% duties transformed the advantage of importing into a burden threatening to halt production, especially since the added value in rolling does not exceed 10-12%.

The USD mn question: Did the protection duties protect the market? It seems not… so far. Federation of Egyptian Industries’ Engineering Industries head Mohamed El Mohandes believes the duties failed to achieve their goals, telling us that the measures widened the price gap and harmed industrial competitiveness, calling for a 50% reduction or total cancellation of the duties.

Contrary to expectations, the duties did not cause steel prices to skyrocket — instead, prices fell due to stagnation. Prices dropped to EGP 32k-34k per ton from EGP 36k-38k, driven by weak demand and an improved exchange rate, before seeing a slight uptick. This indicates that supply-demand dynamics and market stagnation were more influential than the duties, El Marakby explains.

Continued duties raise input costs, which may eventually manifest as price hikes for consumers, head of the Electrical Appliances Division Hassan Mabrouk warns. However, manufacturers might absorb part of the steel price increase by narrowing net margins. Minor price increases (5-10%) are expected but unlikely to significantly impact sales volumes, especially following recent government price-reduction initiatives, CI Capital Research noted in a recent memo seen by EnterpriseAM.

On the export front, the US market’s outlook is bleak. The United States is virtually closed to Egyptian exports due to a combined tariff rate that can reach up to 80%, making exporting economically unviable, according to El Marakby. This global closure reinforces the need to stabilize the local market as the primary outlet for production.

Where does Egypt stand regionally? Data from the Arab Iron and Steel Union shows that while Egypt maintained its lead in North African production with some 10.7 mn tons in 2025, it saw a slight production decline of 0.8%. Conversely, the region is seeing notable growth: production in Saudi Arabia jumped by 12.3% and in Algeria by 17.9%. This disparity puts additional pressure on the Egyptian industry to accelerate billet localization to regain growth momentum.