September 08, 2008

Egypt government controlling steel and cement prices

Due to a notable increase in steel and cement prices on the local market during the past few months, Egyptian government found it necessary to interfere and control prices. Mr Rachid Mohamed Rachid minister of trade & industry of Egypt has issued a decree that imposed additional export duties of EGP 56 per tonne of cement and EGP 160 per tonne of steel. The aim of decree 142 was to reduce the volume of steel and cement exports to meet local market needs.

According to the ministry of trade & industry figures, the local market needs for cement stand at 30 million tonnes annually, while total annual production is estimated at 38 million tonnes. But due to an increase in prices on the international market, producers find it more lucrative to export their goods. As a result, supply to the local market dropped and cement prices rose.

In response to consumer complaints that the steel and cement sectors were being monopolized which is driving prices higher, Mr Rachid asked the Egyptian Competition Authority to investigate both sectors. The ECA issued a report asserting that cement companies are involved in monopoly acts and have colluded to control cement prices. The report added that these companies coordinated in rationing their output to control prices.

In reaction to these conclusions, Mr Rachid referred cement companies to administrative investigations, accusing them of violating Article 6 of the competition and anti monopoly law. The penalty for monopoly acts is a fine between EGP 30,000 to EGP 10 million.