Impact of Market on the Economy of Egyptian Steel Industry

摘要

The adoption of free market policies puts the Egyptian steel industry in a challenging position. Future plans in this sector have to consider not only the local cir-cumstances but also the interna-tional market situation, taking into consideration that the strategy of the country is to increase the export oriented production even if the local production is still serving the demand of the local markets, yet it faces a lot of challenge from the imported similar products.Accordingly to be competitive, it is important to care for the quality, production cost and mar-keting aspects. Most of the com-panies tend to improve the quality of products and some of them have already started programs for the application of ISO 9000 in their plants.More sophisticated is the im-pact of the changes on the pro-duction cost in the steel companies, drastic increase in the last years in the prices of raw materials, energy and labor cost was recorded.Moreover, the remarkable in-crease of the interest rates on the loans in last years from less than 10 percent to about 20 percent put again a big financial burden over the companies. Example of such changes can be summarized as follows:a) Price of electricity has been increased from 0.019 LE/kWh in 1986 to about 0.18 in 1993, which means about 10 times increase.b) Price of natural gas for steel industry has been increased by about 60 percent.c) Price of coke has been drastically increased of about 7.6 times.d) Price of fuel has been increased more than 5 times.e) Price of local scrap has been increased by about 6 times.f) The average of annual sal-aries of employees in the steel industry has been increased by about 240 percent during the period 1985/86 and 1991/92, and is still increasing.The above mentioned growth in the prices of raw materials, energy and manpower shows that steel industry is suffering from the increase of production cost.Several studies have been done between 1978 and 1995 to forecast the steel production de-mand in EGYPT as that done by W.S.Atkins in 1978 and in 1995 by EGITALEC.