{"id":653648,"date":"2024-10-20T00:00:00","date_gmt":"2024-10-20T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/inside_industry\/can-egypt-revive-its-foil-industry\/"},"modified":"2024-10-20T00:00:00","modified_gmt":"2024-10-20T00:00:00","slug":"can-egypt-revive-its-foil-industry","status":"publish","type":"inside_industry","link":"https:\/\/enterpriseam.com\/egypt\/inside_industry\/can-egypt-revive-its-foil-industry\/","title":{"rendered":"Can Egypt revive its foil industry?"},"content":{"rendered":"

There\u2019s huge dema<\/strong>nd for foil in Egypt \u2014 but not a single factory producing it: <\/strong>Among other heavily imported items, President Abdel Fattah El Sisi recently pointed to the state's USD 512 mn import bill between 2014 to 2023 (watch, runtime: 1:26:24<\/a>). Despite the sizable demand for the material that has numerous uses throughout the economy, Egypt does not currently produce foil \u2014 a fact that the president called for investors to help rectify. <\/p>\n

(Tap or click the headline above to read this story with all of t<\/strong>he links <\/strong>to external sources.) <\/p>\n

Local demand \u2014 and in turn our import bill \u2014 for foil has only been growing: <\/strong>The nation\u2019s annual consumption of foil now sits somewhere between USD 120-140 mn, according to Industry Ministry data that Industry Minister Kamel El Wazir recently emphasized to the House. This equates to the local consumption of 46.7 mn tons of aluminum foil annually, member of the Cairo Chamber of Commerce\u2019s home appliances division, Sherif Abdel Moneim, told EnterpriseAM.<\/p>\n

The uptick in demand, however, is not necessarily a bad thing<\/strong>, representing significant growth in the nation\u2019s home appliances industry. The growth of the air conditioning industry \u2014 which consumes large quantities of industrial foil \u2014 is also behind this huge import. Abdel Moneim also noted that the pharmaceutical industries require industrial foil and accounts for much of the imports.<\/p>\n

The problem is that the demand is only met through imports: <\/strong>China is currently the main source of Egypt's aluminum foil imports, with Egyptian factories and companies primarily relying on it to meet their foil paper needs in the absence of any local alternatives, Abdel Moneim noted.<\/p>\n

But Egypt h<\/strong>a<\/strong>sn't always had to rely on imports for its foil needs: <\/strong>Industry insiders explained to EnterpriseAM that the country used to have two foil factories for industrial and household use. Chamber of Engineering Industries head Mohamed El Mohandes told Enterprise that Egypt was among the first countries to produce foil and was self-sufficient before the Helwan and Alexandria factories faced financial pressures and rising raw material and energy costs, forcing them to halt production to avoid accumulating losses.<\/p>\n

With a new economic situation and the right incentives, it could be different this time: <\/strong>Understanding the reasons why local foil production came to a halt and figuring a way to address these challenges could help revive the industry, industry sources told us. It was reiterated to us that this is a no-brainer given the high domestic demand for the material. <\/p>\n

Egyptian-made foil needs a helping hand to be competitive: <\/strong>El Mohandes noted the successive local price increases of the materials used for foil manufacturing amid a global rise in raw material costs and pressures on the country\u2019s manufacturing industry. This means that imported products are often much cheaper. Raw material pricing intervention and provision could help give local manufacturers a boost and enable them to reach a competitive price point.<\/p>\n

Energy costs are standing in their way of keeping the cost of the final product down:<\/strong> Rising energy prices are making it even harder for local manufacturers to offer their products at a competitive price, El Mohandes told us, adding that providing energy to these industries at a low price could help persuade manufacturers and investors to commit to projects to revive the local foil industry.<\/p>\n

Modern production lines and export-oriented production are lao needed:<\/strong> Both Abdel Moneim and El Mohandes emphasized that the industry needs new production lines and modern machines to revive the industry. Abdel Moneim added that the factory needs rolling machines, which require production lines that cost about USD 3 bn.<\/p>\n

Import tariffs on imported foil could also help boost local competitiveness:<\/strong> El Mohandes stated that the local industry does not get any kind of protection in terms of preventing imports from undercutting the price point that local alternatives could offer. <\/p>\n

There\u2019s already movement to try and revive the industry:<\/strong> EGX-listed Egypt Aluminium (EgyptAlum) is in negotiations with German rolling and foil slitting technology specialist Achenbach<\/a> over its potential investment and funding of its USD 100 mn foil production line, according to an EGX disclosure (pdf)<\/a> last month. EgyptAlum first unveiled its plans for the production line in April<\/a>.<\/p>\n

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