Reuters reported that HC Research cut Egypt's Ezz Steel's share price target by 11%, citing lack of clarity on iron ore prices and scrap price volatility.

The brokerage which cut its price target on the stock to EGP 23.5 also lowered earnings estimates for Egypt's largest steelmaker.

HC Research said that it saw a slowdown in local demand and the delay in start of operations of the company's new direct reduced iron plant hurting its market view.

HC Research analysts said that the inability to raise prices in July and August due to an inventory pile up indicates that Ezz Steel may witness margin pressure in third quarter.

The company has been buying iron ore a key raw material in the Q3 at provisional prices which the brokerage believes could be 20% higher than the Q2 contractual prices. However, the medium term outlook for iron ore prices seems favorable for steel producers as more global capacity is expected to come on stream.

(Sourced from Reuters)