Emad El-Din Mostafa called for the importance of urgently liberalizing fertilizer prices, especially after increasing the tariff of gas supplied to factories with the aim of eliminating the black market

Newsletter

01 Nov 2021

For our top talks today, Emad El-Din Mostafa, CEO and Managing Director of the Holding Company for Chemical Industries, called for the importance of urgently liberalizing fertilizer prices, especially after increasing the tariff of gas supplied to factories with the aim of eliminating the black market. He stressed the need for the government to cancel the decision to allocate 55% of the production volume for sale at a subsidized price of 3000 pounds, taking into account the production cost at the price of the final product. (Al-Mal)

Second, Dr. Ali Al-Moselhi, Minister of Supply and Internal Trade, confirmed that a meeting will take place next week with Mohamed Farid, head of the Egyptian Stock Exchange, and Dr. Ibrahim Ashmawi, head of the Internal Trade Development Authority, to discuss the procedures for starting trading in the commodity exchange when it launches early next year.
He stated that the commodity exchange will provide a measure of protection for small farmers and producers by collecting and classifying their production and making it available to all dealers on the stock exchange platform in the form of an organized market in a way that contributes to increasing the competitiveness of small farmers and producers. (AL-Borsa News)
Equally important, the Egyptian government has raised gas prices for factories by up to 28% as global gas prices remain elevated. Cement, iron and steel, and petrochemicals and fertilizers producers will now pay USD 5.75 / mmBtu (Metric Million British Thermal Unit), up from USD 4.5 / mmBtu. Gas prices for other industries will rise 21% to USD 4.75 / mmBtu.
Global gas prices have surged this year amid rising post-lockdown demand in Asia and tightening supply. Prices in Europe and the UK have soared to record highs while Nymex futures have more than doubled to hit their highest levels since late 2008. (The Official Gazette reported)
With this in mind, the Egyptian Minister of Petroleum and Mineral Resources, Tarek El-Molla, has laid the cornerstone for a coking and diesel production complex at Suez Refinery at an investment cost of 1.770 billion USD.
The project is planned to increase the production capacity of high-value petroleum products especially butane and diesel as per the Euro 5 standards in order to reduce imports and provide high-quality fuel for advanced car engines. The minister followed up on the progress of several projects at the refinery aimed at boosting production capacities, including the asphalt factory which is being established at an investment cost of 61 million USD to produce about 1,200 tons of asphalt per day. (Mubasher)
As can be seen, we believe that the global inflationary wave that the world is currently witnessing is a global crisis with excellent repercussions on all production inputs in all industries, whether food, construction or even cars, as it included all imported or locally assembled production inputs. We expect that the peak of the crisis would be during the coming period with the advent of the winter season and the energy crisis with lower temperatures.
But in the second half of 2022, beginning in July, this wave will begin to recede with the emergence of solutions related to production chains, especially the developed countries that will witness progress in the file of vaccination with the Corona virus vaccines. And about the expectations of raising interest rates by the CBE, It will try hard to maintain the stability of interest rates as much as possible, unless we reach the stage of raising interest rates to control inflation rates. (Zilla Capital)
And for our COVID-19 vaccine watch, Egypt received the fourth shipment of the new Corona virus vaccine, produced by the “Pfizer” company, with a total of 3,634 thousand and 20 doses.
This shipment was provided by the US government through the “Cofax” mechanism in cooperation with the International Alliance for Vaccines and Vaccines (GAVI), within the framework of the state’s plan to diversify and expand the provision of vaccines to citizens to preserve the gains in addressing the pandemic, pointing out that the total doses of he “Pfizer” vaccine that Egypt has received so far has reached 8 million and 255 thousand and 520 doses. (Egypt Ministry of Health & Population)
Moving to the most important G20 talks, which includes the 20 largest economies in the world! So, first, the G20 will ratify the agreement of the Organization for Economic Cooperation and Development to set a global minimum corporate tax of 15.
Reuters said that it had seen a draft of the G20 summit, which will be held over Saturday and Sunday, indicating that the member states of the group will ratify the agreement, which could enter into force in 2023. On October 8, 136 countries agreed to a global agreement to tax multinational companies at a minimum of 15%. The agreement includes giant Internet companies such as "Google", "Facebook", "Amazon", "Apple" and Microsoft. This means that multinational corporations will be required to pay a minimum amount of tax at any location around the world. (Reuters)
Second, the U.S. President Joe Biden stressed the importance of competitive and balanced energy markets in order to promote the global recovery from the pandemic while the leaders of the Group of Twenty meet in Rome. He urged to increase the production as part of a broad effort to pressure OPEC and its allies to increase the supply of oil.
According to Bloomberg, Chinese President Xi Jinping spoke via a video link about treating all COVID-19 vaccines equally, and also called for the recognition of vaccines approved by the World Health Organization. Russian President Vladimir Putin demanded the same thing, accusing some G20 members of protectionism over the recognition of vaccination certificates. British Prime Minister Boris Johnson urged his Italian counterpart Mario Draghi to do more about Italy's climate financing commitments in their bilateral talks. (Bloomberg)
Moreover, the volume of trade Exchange between Egypt and the G20 countries jumped 19.4% during the first half (H1) of 2021, recording 36 billion USD.
Egyptian exports to the G20 countries increased by 39.2% to 9 billion USD in H1 2021, compared to 6.5 billion USD in the same period in 2020. Meanwhile, Egyptian imports from the G20 countries amounted to 27 billion USD compared to 23.7 billion USD, an increase of 14%. (Central Agency for Public Mobilization and Statistics (CAPMAS))
And for our EGX & companies talks, New City Development Company plans to launch the construction of the first phase of its “Eco West October” project, with an investment cost of approximately 270 million EGP.
The first phase includes 14 residential buildings that include more than 520 units, while the mentioned investments are limited to construction and finishes only, without infrastructure and landscaping works. New City Development announced a partnership agreement with Al-Hazeq Construction to implement the construction works of the Eco West project. It is worth noting that the project's investments are estimated at 2.5 billion EGP, explaining that the company targets the Egyptian citizen of the middle and above-average segment. (Al-Mal)
Furthermore, Mountain View Real Estate Company achieved sales of 14 billion EGP during the first 9 months of this year, despite targeting total sales of 15 billion pounds during the whole year, so that “Mountain View” continues to advance in the first places among real estate development companies in Egypt in terms of sales in 2021 thanks to projects innovative.
It is worth mentioning that the real estate sector would witness more recovery during the coming period, with the government moving to work from the administrative capital, and the consequent recovery of new cities in east Cairo, as well as the completion of smart mass transit projects such as the monorail and the electric train. As for prices, it is expected that real estate prices will rise during the coming period, and that this increase will be linked to the increase in building materials costs, which have already increased during the last period affected by the global inflation wave and the increase in global oil prices. (Mubasher)
And finally, several local and foreign institutions, including Egyptian banks, expressed their interest in entering into the ownership structure of the “Aman Holding” company for financial services technology, whether by offering the company on the stock exchange, or by acquiring a direct stake.
And “Raya Holding for Financial Investments” announced last April, in a disclosure to the EGX, that the National Bank of Egypt had implemented an offer to acquire 24% of Aman Holding Company, at a value of 480 million EGP, representing 9 million shares, at an average price of 53.33 EGP per shar. (Al-Mal)