Biting the billet: Kharafi ups Egypt investments with second billet licenseBy Theodore MayFirst Published: January 15, 2009
CAIRO: It’s a bold move at a time when the global economy seems have ground to a screeching halt: Al-Kharafi Group announced this week that it was awarded a contract by the Industrial Development Authority to produce an additional 6 million tons of steel billets annually.
This comes less than a year after Al-Kharafi, a privately owned Kuwaiti company, was awarded the first contract for producing steel billets in Egypt.
The newly awarded license is in line with the company’s plans to boost its investments in Egypt.
"We expect to inject new investments worth not less than $3 billion in the tourism sector and the majority will be in the industrial sector," Ibrahim Saleh, the company’s vice chairman, told Reuters late last December.
Al-Kharafi has agreed to pay LE 108 million in licensing fees as part of the deal, which is expected to bring somewhere around $800 billion in investment to the country.
Despite the roiled economic waters, steel industry experts anticipate that the length of time it takes for a steel plant to come online could help companies like Al-Kharafi miss the worst of the storm.
"There is a very long lead time with these plants,” said Patrick Gaffney, vice president for equity research at investment bank EFG-Hermes. “The earliest they could start production would be by late 2011, but I wouldn't be surprised if they didn't start production until 2013 for this second plant.”
Also boosting hopes that the Al-Kharafi project may be successful is that the company plans to produce billets rather than finished steel.
"They're doing billets, which is an input into the steel making process,” explained Gaffney.
Even if the demand for finished steel decreases, production of it is likely to exceed demand. Al-Kharafi will have the opportunity to sell billets for use in all finished steel products.
"As long as there is demand for steel products, then there will be demand for billets,” added Gaffney.
Steel prices have fallen precipitously in the last few months. "Prices have fallen since August of last year,” said Gaffney.
Even with prices low in Egypt, they’re even lower on the international market.
"If you look at where [steel on the international market] is trading, it's below Egyptian prices,” said Gaffney. “But if you include taxes and shipping, Egyptian prices are not too much higher."
Daily News Egypt reported earlier this week that with cheap prices internationally, steel traders are planning to import up to 100,000 tons in the coming months from the Ukraine, Turkey and Greece at a price range of between LE 3,500 and LE 3,700 per ton
The Managing Director of Ezz El Dekheila told Al-Alam Al-Youm earlier this week that he sees stability in steel prices in the Egyptian market and that current demand on steel has increased from the same period last year. This, he says, is an indicator that the Egyptian construction industry has not yet been affected by the global economic slowdown given increasing demand on building units, especially among low- and medium-cost housing.
Prices on the London exchange fell dramatically over the second half of the year, down 70 percent between June and December of last year.
Al-Kharafi’s investment was a bold one given the economic climate and the slumping steel prices. But since it will take several years for the new plants to come online, the markets may have plenty of time to recover
Thursday, January 15, 2009
Monday, December 29, 2008
Oil pares gain after rise over $40 on Israel, dollar
Oil pares gain after rise over $40 on Israel, dollar
By Jane Merriman
First Published: December 29, 2008
AP Photo/Kamran Jebreili
A man fills a petrol barrel at port Khalid in Sharjah, United Arab Emirates, Tuesday, April 22, 2008.
LONDON: Oil pared gains on Monday after a rise above $40 a barrel, in response to a weak dollar and Israeli attacks on Gaza that served as a reminder of tensions that could threaten Middle East crude oil supplies.
US light, sweet crude was up $1.16 at $48.87 a barrel by 1506 GMT, below a session high of $42.20.
Oil is on track for a nearly 60 percent loss this year, the biggest annual fall since futures began trading 25 years ago.
London Brent crude rose $1.39 to $39.76 a barrel, after touching a session high of $43.18.
"Geopolitics had disappeared from the oil scene for the last couple of months but will regain some price premium with the latest Israeli attack in Gaza," Olivier Jakob, of consultants Petromatrix, said in a research note.
Israeli aircraft attacked Hamas targets in Gaza on the third day of an offensive that has killed more than 300 Palestinians, many of them civilians.
The attacks enraged Arabs across the Middle East and highlighted the risk, however remote, that the conflict could threaten oil supplies from the region.
Gold initially rose nearly 3 percent to its highest since early October on the weak dollar and the Middle East violence.
The dollar fell broadly, pressured by the gloomy outlook for the US economy.
"The level and intensity of violence this time has warranted a fiercer response from the broader Arab world and beyond," said Raja Kiwan of energy consultants PFC Energy.
Kiwan said, however, that the amount of bearish economic news would ultimately overshadow such geopolitical factors.
Oil is down more than $100 a barrel from a record peak of more than $147 in July, depressed by the downturn in the world economy, which has hit demand for fuel.
Prices had broken a nine-session losing streak on Friday partly on evidence of OPEC compliance with its biggest ever production cut agreed earlier in December to try to halt the market's slide.
Libya has told oil firms to curb output by 270,000 barrels per day from Jan. 1, more than the reduction it needs to make under OPEC's agreement to cut output.
The Abu Dhabi National Oil Co, the UAE's main producer, said it would cut January and February oil exports by much more than some refiners had expected.
The allocations were among the first concrete examples that OPEC exporters were implementing the Organization of the Petroleum Exporting Countries' Dec. 17 deal to cut supplies by 2.2 million barrels per day.
Saudi Arabia, the world's largest exporter, had informed its customers of cuts even before the meeting.
OPEC has cut output three times in an effort to remove about 5 percent of world supply to halt the slump.
China's energy chief said the world's second-largest oil user after the United States would take advantage of falling oil prices to boost imports and build up its fledgling oil reserves.
By Jane Merriman
First Published: December 29, 2008
AP Photo/Kamran Jebreili
A man fills a petrol barrel at port Khalid in Sharjah, United Arab Emirates, Tuesday, April 22, 2008.
LONDON: Oil pared gains on Monday after a rise above $40 a barrel, in response to a weak dollar and Israeli attacks on Gaza that served as a reminder of tensions that could threaten Middle East crude oil supplies.
US light, sweet crude was up $1.16 at $48.87 a barrel by 1506 GMT, below a session high of $42.20.
Oil is on track for a nearly 60 percent loss this year, the biggest annual fall since futures began trading 25 years ago.
London Brent crude rose $1.39 to $39.76 a barrel, after touching a session high of $43.18.
"Geopolitics had disappeared from the oil scene for the last couple of months but will regain some price premium with the latest Israeli attack in Gaza," Olivier Jakob, of consultants Petromatrix, said in a research note.
Israeli aircraft attacked Hamas targets in Gaza on the third day of an offensive that has killed more than 300 Palestinians, many of them civilians.
The attacks enraged Arabs across the Middle East and highlighted the risk, however remote, that the conflict could threaten oil supplies from the region.
Gold initially rose nearly 3 percent to its highest since early October on the weak dollar and the Middle East violence.
The dollar fell broadly, pressured by the gloomy outlook for the US economy.
"The level and intensity of violence this time has warranted a fiercer response from the broader Arab world and beyond," said Raja Kiwan of energy consultants PFC Energy.
Kiwan said, however, that the amount of bearish economic news would ultimately overshadow such geopolitical factors.
Oil is down more than $100 a barrel from a record peak of more than $147 in July, depressed by the downturn in the world economy, which has hit demand for fuel.
Prices had broken a nine-session losing streak on Friday partly on evidence of OPEC compliance with its biggest ever production cut agreed earlier in December to try to halt the market's slide.
Libya has told oil firms to curb output by 270,000 barrels per day from Jan. 1, more than the reduction it needs to make under OPEC's agreement to cut output.
The Abu Dhabi National Oil Co, the UAE's main producer, said it would cut January and February oil exports by much more than some refiners had expected.
The allocations were among the first concrete examples that OPEC exporters were implementing the Organization of the Petroleum Exporting Countries' Dec. 17 deal to cut supplies by 2.2 million barrels per day.
Saudi Arabia, the world's largest exporter, had informed its customers of cuts even before the meeting.
OPEC has cut output three times in an effort to remove about 5 percent of world supply to halt the slump.
China's energy chief said the world's second-largest oil user after the United States would take advantage of falling oil prices to boost imports and build up its fledgling oil reserves.
Egypt stock indexes nearly flat in quiet trade
Egypt stock indexes nearly flat in quiet trade
By Alaa Shahine
First Published: December 29, 2008
CAIRO: Main Egyptian stock indexes were nearly flat in quiet trade on Sunday, with investors hunting for bargains buying into Orascom Construction Industries (OCI), traders said.
Shares in OCI, Egypt's largest listed builder, rose more than 1 percent before crawling back towards the end of the session to last trade at LE 126 ($22.82), 0.21 percent higher compared to Thursday's close.
"There was some buying power in OCI, possibly because it is at a low price at the current level. Most research reports set the price target for OCI at around LE 300," said Mohamed Kotb, director of asset management at Naeem Financial Investment.
"There is a huge upside potential for the stock," Kotb added.
Traders said the market remains quiet during the holiday season, with low volumes and weak interest from foreigners.
"The market is dead. Everything will be clear on Jan. 1," said Hashem Ghoneim, Vice Chairman of Pyramids Capital.
Oriental Weavers, the world's biggest machine-woven carpet maker, rose 0.71 percent to LE 22.80. The firm said on Sunday it would delay planned construction work on a new industrial complex from mid-2009 to the beginning of 2010 because of the global financial crisis.
"This (the share's rise) could be a reward for the management of the company because in the current circumstances it is not reasonable to carry out new projects," Kotb said.
Overall, the benchmark CASE 30 index ended 0.15 percent lower at 4,351.39 points and the rival Hermes index .HRMS shed 0.19 percent to 407.88 points. The broad-based CIBC index .CIBC fell 0.32 percent to 280.9 points.
By Alaa Shahine
First Published: December 29, 2008
CAIRO: Main Egyptian stock indexes were nearly flat in quiet trade on Sunday, with investors hunting for bargains buying into Orascom Construction Industries (OCI), traders said.
Shares in OCI, Egypt's largest listed builder, rose more than 1 percent before crawling back towards the end of the session to last trade at LE 126 ($22.82), 0.21 percent higher compared to Thursday's close.
"There was some buying power in OCI, possibly because it is at a low price at the current level. Most research reports set the price target for OCI at around LE 300," said Mohamed Kotb, director of asset management at Naeem Financial Investment.
"There is a huge upside potential for the stock," Kotb added.
Traders said the market remains quiet during the holiday season, with low volumes and weak interest from foreigners.
"The market is dead. Everything will be clear on Jan. 1," said Hashem Ghoneim, Vice Chairman of Pyramids Capital.
Oriental Weavers, the world's biggest machine-woven carpet maker, rose 0.71 percent to LE 22.80. The firm said on Sunday it would delay planned construction work on a new industrial complex from mid-2009 to the beginning of 2010 because of the global financial crisis.
"This (the share's rise) could be a reward for the management of the company because in the current circumstances it is not reasonable to carry out new projects," Kotb said.
Overall, the benchmark CASE 30 index ended 0.15 percent lower at 4,351.39 points and the rival Hermes index .HRMS shed 0.19 percent to 407.88 points. The broad-based CIBC index .CIBC fell 0.32 percent to 280.9 points.
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