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We have news of the government’s plan to slash oil supplies to the country’s fertilizer producers, news of a potential decline in home appliance prices, and more.
Egypt reduces nat gas supplies to fertilizer players
The Clap:
Egypt’s Ministry of Petroleum and Mineral Resources reduced natural gas supplies to fertilizer manufacturing companies by a 20- 30% margin, officials familiar with the state strategy told Al Arabiya Business.
Timeline:
The Egyptian Natural Gas Holding Company informed domestic fertilizer companies on Monday of cabinet’s decision to reduce gas supplies.
Claps class:
Nitrogen, the primary component of fertilizer enabling high agricultural yields, must be produced using natural gas. Natural gas provides between 70 and 80 percent of the energy needed to make essential fertilizers.
Impact:
Two fertilizer companies said they will have to shutter the doors to a third of their three factories, while noting their remaining facilities would receive about 80% of their natural gas demands in coming days.
Remember:
In response to a decline in gas supply brought on by the conflict in Gaza, the government last reduced gas supplies to energy-intensive industries by up to 30% in November, mostly affecting fertilizer, iron, and aluminum companies.
This comes as cabinet works to slash energy spending:
Axing spending on gas comes as the country wrestles with its domestic energy supply after becoming a net importer of LNG in recent months following a fall in domestic gas production.
Why this matters:
Ending energy spending is one of the IMF’s demands to unlock the USD 8 billion loan program. The IMF called on the government to control unaffordable energy subsidies and fuel prices in compliance with the prices mandated by the automatic fuel pricing committee, and channel spending instead toward social support programs.
Electric and household appliances are set for a trim
The Clap:
Manufacturers of household appliances are expected to begin lowering prices by at least 5 to 10% , Federation of Egyptian Industries’ household appliances division chief Hassan Mabrouk told Al Arabiya Business.
Driving force:
Following the easing of the previous imports backlog, there is now a surplus of home appliances in the market due to the release of goods that had been piled up in customs over the past months. We’re also seeing an inflow of goods from the first import cycle after the exchange rate liberalization last March, he said.
Remember:
Home appliance prices rose and sales dropped as much as 60% at the start of 2024 as a result of higher input costs for Egyptian companies that produce equipment, including steel.
What else is clapping?
According to S&P Global’s Egypt Purchasing Managers’ Index, Egypt’s non-oil private sector activity surged to its highest levels in nearly three years during May — up 1.9 percentage points to 49.6%, driven by declining prices and rising confidence post- currency float that brought the economy close to expansion.
The Sovereign Fund of Egypt will auction off between seven-eight former ministerial headquarters in Downtown Cairo to investors during 2H 2024, Planning Minister and Fund chair Hala El Said told Asharq Business. El Said echoed her statement last week that several local and foreign investors have already submitted offers for the buildings.
Abu Dhabi’s state owned Adnoc Distribution will commence motor oil production in Egypt before the end of 2024, the company’s CEO Bader Al Lamki told Asharq Business, noting his firm is looking to expand it’s expand its local and regional foothold by adding add 15-20 gas stations in Egypt, Saudi Arabia, and the UAE over the next six months.
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