HC Research downgraded Al Ezz Steel Rebars to hold from buy saying the firm may witness margin contraction during the H2 of 2009 due to lower steel prices and higher raw materials prices.

HC said that steel rebars prices will continue to see downward pressure similar to the 2% drop during the Q3 due to the continuation of imports. At this point in time, any price revival will be temporary and centric to scrap price fluctuations, given that recoveries in demand during the Q4 of 2009 are expected to be minimal.

The brokerage, however said that it maintained its strong demand outlook for the Egyptian market and forecast local steel demand in the region to grow at a compounded annual growth rate of 17.6% between 2009 and 2013.

(Sourced from Reuters)