According to some news sources, the government is planning to cut natural gas price cut to USD4.5/mmbtu. However, we have confirmed with Ezz Steel's management that the news is false and that gas prices remain unchanged at USD7/mmbtu. It is worthy of noting that the issue of gas price cuts had been raised last year and failed to come to fruition.

Overall, we do not expect this gas price cut to come into effect and for prices to remain at the USD7/mmbtu. But, we highlight that it may offer massive cost savings, in the unlikely event that it would happen, of USD10/tonne for every USD1/mmbtu cut in gas price. We remain Buyers of Ezz Steel. 

Ezz Steel: EGP18.11 as of 6 Mar. 2017, Rating: Buy, TP: EGP25.00/share, MCap: USD589mn, ESRS EY/ESRS.CA