Egypt Metals Report Q4
2012

Egypt Metals Report Q4 2012

BMI's Egypt Metals Report for Q412 examines the impact of political developments on domestic demand and output in 2012. The report examines the influence of the weak Egyptian pound on the sector and whether depreciation is sufficient to compete in an over-supplied regional market. It also examines the promise of expansion in primary aluminium smelting with Egyptalum seeking to expand production to 400,000 tonnes per annum (tpa). The report also analyses the trends in export markets, particularly in relation to the surge in steelmaking in the Arabian Gulf region. In the first seven months of 2012, base effects led to 2.6% growth in crude steel output to 3.9mn tonnes

(mnt). Towards the end of the period monthly crude output rates appeared to be on a strong upward trend. However, flat and long sales on the domestic market were sluggish with rebar at very low levels due to a climate of uncertainty around the elections as well as a slowdown in activity associated with Ramadan. BMI is confident that as the new civilian democratic government finds its feet, investment and manufacturing activity will pick up in the months ahead, which should support the upward domestic production trend going forward. In addition to more favourable market dynamics, BMI's forecast for 2013 is supported by Elmarakby Steel's plans to open its first meltshop to produce steel billets from scrap by end-2013. The 350,000tpa EAF in Giza will feed an existing 240,000tpa rolling mill with the remainder exported or sold on the domestic market. The country has been operating well under full capacity, with a utilisation rate under its 8.8mn tonnes per annum (mntpa) potential. Even without further capacity expansion, Egypt has the potential to grow over 30% from 2010 levels using currently operating plants. Over the last quarter BMI have revised the following forecasts/views:

• Despite the effects of political instability in the short term, BMI still expects annual crude output to reach 11.04mnt by 2016. Although this represents a 72% increase over 2011 levels, it will be just enough to keep up with domestic requirements.
• Egyptian crude steel output should grow 4% to 6.7mnt, an upward revision from the 3% growth forecast previously.
• BMI anticipates 2% growth in steel consumption to 10.1mnt in 2012, a downward revision from 4% growth previously forecast due to the downturn in consumption witnessed during the May and June elections.

• Executive Summary
• SWOT Analysis
• Egypt Business Environment SWOT
• Africa Overview
• Steel
• Aluminium
  • Table: Aluminium Smelters In Africa
• Industry Forecasts
• Steel Industry
  • Table: Egypt - Steel Production & Consumption ('000 tonnes, unless otherwise stated)
  • Table: Egypt - Steel Production Historical Data ('000 tonnes, unless otherwise stated)
• Aluminium
• Macroeconomic Outlook
• Economic Outlook Fails To Inspire
  • Table: Egypt - Economic Activity
• Commodities Forecast
• Steel Price Forecast - Steel To Average US$360/tonne In 2013
  • Table: Steel Forecast
  • Table: Steel Forecasts
• Commodity Strategy - Monthly Metals Update
• Aluminium: Support At US$1,800/tonne Likely To Hold
• Copper: Relative Outperformer But Still Weak
• Lead: Potential For Short-Term Rally
• Nickel: No Turnaround Coming
• Steel: More Pain Ahead
• Tin To Outperform
• Zinc: Little Room For Optimism
  • Table: Select Commodities - Performance & BMI Forecasts
• Competitive Landscape
  • Table: Ezz Steel Facilities
• Company Profiles
• Ezz Steel
• Aluminium Company of Egypt (Egyptalum)
• BMI Methodology
• How We Generate Our Industry Forecasts
• Cross Checks