China’s Zenith Steel to supply Egypt’s tire hub via new USD 300 mn facility

Wired in

Egypt’s tire manufacturing base gets another Chinese player: Chinese steel manufacturer Zenith Steel is investing USD 300 mn in the Chinese-operated Teda zone at Ain Sokhna, according to a statement. The company — a subsidiary of Chinese conglomerate Zhongtian Group — will produce 120k tonnes of steel cord and 50k tonnes of bead wire annually — the steel reinforcement used in vehicle tires.

This is part of a wider supply chain localization play. In addition to plans to export 30% of the output to the Middle East, Europe, and the Americas, the new plant will supply raw materials currently being imported for Egypt’s growing cluster of tire factories. Zenith is setting up next to the Chinese tire makers already inside Teda — like Sailun’s USD 1 bn plant, which broke ground last year. The plant also comes amid a larger push by the government to advance its auto sector beyond assembly by tying incentives to local content, with the revamped Automotive Industry Development Program (AIDP) setting local-content requirements at 20%, and recent auto projects already building in feeder-industry facilities.

ICYMI- Egypt’s Suez Canal Economic Zone (SCZone) is set to welcome a USD 291 mn tire plant to support auto component localization, while Chaoyang Langma Tire is lining up a USD 190 mn facility for heavy-truck and passenger-car tires.

It’s PMI time once again, folks: Saudi Arabia’s non-oil economy sped up in June while the pinch deepened in the UAE. We think readings in both markets got a boost from spending by state institutions.

• The Riyad Bank PMI rose to 53.3 from 52.8 in May, a three-month high, on domestic demand and a fresh round of project approvals. Export sales were sharply down thanks to the conflict in the Gulf and input cost inflation hit a 15-year high, prompting participating firms to raise their output prices at the second-fastest pace in nearly six years.
• The S&P Global UAE PMI fell to 50.8 in June from 52.6 the month before — its weakest reading since February 2021 — with companies cutting jobs at the fastest pace since August 2020. Domestic spending and government investment kept the index in growth territory.

Tailwinds no more

Algeria and Libya are now bracing for lower crude revenues, as global oil prices stabilize on the heels of the US-Iran ceasefire. On Saturday, Libya’s flagship Sidr crude was trading at its lowest in 13 months at a discount of USD 0.3 per barrel compared to Brent, whereas Algeria also lowered its asking price to be at a USD 0.4 discount. The new pricing is a reversal of fortunes for the North African nations that produce premium light, sweet grades, which both benefited from unrestricted access to the global market despite the far-reaching disruptions in the GCC — the tailwinds were so big that Libya’s oil exports in May generated some USD 4 bn in revenues, its highest monthly figure in over 11 years.