{"id":672654,"date":"2025-09-28T00:00:00","date_gmt":"2025-09-28T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/inside_industry\/gas-price-hikes-to-have-uneven-impact-across-industry\/"},"modified":"2025-09-28T00:00:00","modified_gmt":"2025-09-28T00:00:00","slug":"gas-price-hikes-to-have-uneven-impact-across-industry","status":"publish","type":"inside_industry","link":"https:\/\/enterpriseam.com\/egypt\/inside_industry\/gas-price-hikes-to-have-uneven-impact-across-industry\/","title":{"rendered":"Gas price hikes to have uneven impact across industry"},"content":{"rendered":"

The <\/strong>government<\/strong> has <\/strong>raised<\/a><\/strong> natural gas supply prices for the industrial <\/strong>sector by 28%<\/strong>, or USD 1 per mn British thermal units (BTU), effective since 15 September. Prime Minister Mostafa Madbouly\u2019s decision follows an Oil Ministry study that looked into balancing local market needs and securing gas supplies for factories \u2014 but it places varying degrees of pressure on local industries ranging from steel, aluminum, and ceramics to fertilizers, while sectors like cement and clay bricks remain less affected.<\/p>\n

The breakdown:<\/strong> The government will supply gas to nitrogen fertilizer producers at USD 5.5<\/a>per mn BTU<\/a> (according to the pricing formula), USD 6.75 for steelmakers, USD 13 for cement producers, and USD 5.57 for ceramics and other activities. The decision had been delayed in recent months to contain inflation, government sources told EnterpriseAM last week<\/a>.<\/p>\n

Madbouly\u2019s decision requires fertilizer producers to sign a protocol specifying three <\/strong>allocations<\/strong> \u2014 volumes supplied to the Agriculture Ministry, volumes sold locally through auctions, and export volumes. The arrangement balances company returns with market stability, with the state committed to providing factories with sufficient gas, the Industry Ministry argued in a statement<\/a>. Regulators have also been tasked with monitoring markets to prevent unjustified price hikes.<\/p>\n

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BUT HOW WILL INDUSTRIES FEEL THE IMPACT?<\/p>\n

Steelmakers will take the hardest hit. <\/strong>Integrated steel plants \u2014 which use around 11 mn BTU per ton in the reduction stage \u2014 will see their costs rise by some EGP 500 per ton with every USD 1 per mn BTU increase, Metallurgical Industries Chamber director Mohamed Hanafi told EnterpriseAM. For rolling mills, where gas use is limited to furnace heating, costs will rise by no more than EGP 50 per ton. Whether factories pass on the higher costs or absorb them remains undecided, Hanafi said. <\/p>\n

Fertilizer producers are expected to be more resilient. <\/strong>Helwan Fertilizers, which uses gas for 70% of its inputs, doesn\u2019t expect the hike to disrupt operations, Chairman Hassan Abdel Alim told us, adding that as a state-owned company, it expects the government won\u2019t damage a strategic industry. The company will offset costs by boosting profitability and operational flexibility, with exports now set to account for 53% \u2014 down from 55% \u2014 of total output, while 37% will go to the Agriculture Ministry and 10% to the local market at market prices, Abdel Alim said.<\/p>\n

Fertilizer producers overall are expected to absorb the price hike<\/strong> and still meet mandated subsidized allocations under clear binding protocols, according to Polyserve Chairman Sherif El Gabaly. Producers will also have more room to evaluate the unsubsidized portion of production, which will be priced based on supply and demand \u2014 a dynamic that will become clearer in the coming weeks, El Gebaly explained.<\/p>\n

Each USD 1 per mn BTU increase in natural gas feedstock costs cuts total profitability<\/strong> at Abu Qir Fertilizers by 15% and at Mopco by 12%<\/strong>, CI Capital noted in a research note. Meanwhile, urea prices exported from the Middle East have lost 61.2% of their annual gains, standing at USD 449 per ton on 25 September.<\/p>\n

Ceramics and porcelain are also under pressure<\/strong>, with factories now paying USD 5.57 per mn BTU for gas, and ceramic and porcelain tile prices set to rise 8-10% for consumers, head of the ceramics division at the Federation of Egyptian Industries\u2019 Building Materials Chamber and deputy chairman of El Sallab Group, Hossam El Sallab, told EnterpriseAM. But with already weak purchasing power and falling local demand, factories will struggle to pass on the extra cost to consumers, compounding pressures from unfair competition with imports from countries such as Saudi Arabia, Jordan, and Libya, which face no customs tariffs.<\/p>\n

C<\/strong>ement makers are least affected<\/strong>, as they primarily use imported coal and rely very little on gas, Egyptian Cement Division Chairman Ahmed Shireen Korayem told EnterpriseAM.<\/p>\n

Gas prices for brick factories remain unchanged at EGP 210 per mn BTU<\/strong>, representing around 45% of final production costs, head of the Bricks Division at the Federation of Egyptian Industries, Ali Singer, told us. He clarified that the latest gas supply price decision does not apply to brick factories.<\/p>\n

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