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Wednesday, 4 May 2016

Chamber of Metallurgical Industries was not notified of a decision to backtrack on gas price reduction

The Chamber of Metallurgical Industries was not notified of a cabinet decision to backtrack on reducing the price of natural gas supplied to steel factories to USD 4.5 per MMBtu from USD 7, Deputy Chairman Rafiq Al Dawi told Amwal Al Ghad. The reported cabinet decision came after producers hiked their average price per ton sold on the back of rising input prices and the devaluation of the EGP; Al Dawi confirmed to Amwal Al Ghad that steel prices are up as much as EGP 1,000 per ton. The flap over gas prices has prompted Gamal Al Garhy, the metallurgical chamber’s chairman, to argue that the government had no intention of following through with the price cuts in the first place — and accused “a particular businessman” in the industry of having influenced cabinet’s decision to reverse the gas price cut. In an interview with Al Borsa, Al Garhy balked at other industries wanting similar reductions in energy prices, saying natural gas is more of production input for the steel industry than it is an energy source.

On the flipside, sources at EGAS told Al Borsa that the regulator was never told by cabinet to reduce the price of gas to steel manufacturers. EGAS does not have enough gas available to meet industry demand, the sources claim, adding that there is a risk gas supplies to manufacturers will once again be cut as demand grows during the peak summer months.

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