According to an article in Al Borsa Newspaper, the government is reevaluating its decision to reduce the price of natural gas for steel companies from USD7/mmbtu to USD4.5/mmbtu, following the price increases witnessed in the steel market. The article states that the situation is currently being assessed and that the Minister of Trade and Industry, Tarek Qabil, will be presenting the findings of the review after the three-month period has been concluded (which would be in June, based on the earlier decision taking place in March). According to a source familiar with the matter, the discussions to raise the price of gas back to USD7/mmbtu come as i) steel prices went up by EGP800/tonne in the local market; ii) billet import levels have not dropped; and as iii) other industries have also called to reduce their respective cost of gas.   Our view on the recent hike in local steel: While the rise in local steel prices seems at first to be abrupt and excessive, we think that the EGP800/tonne increase seems to be only partially passing on the recent rise in prices of steel in Turkey. Since February, rebar prices in Turkey have witnessed a cUSD120/tonne hike (or USD50/tonne since March), which was mainly driven by a rebalancing in raw material prices as scrap prices (the main raw material in Turkey) rallied 48% from February to April. We think that local producers are moving to pass on this increase in raw material prices as well as the devaluation that took place during March.   Raising the price of natural gas again to USD7/mmbtu, which would reflect a USD25/tonne increase, would pose downside to our earnings estimates in 2016. Assuming spot local steel prices and raw materials, we think that raising the price of gas to USD7/mmbtu would pose a c25% downside to our 2016 EPS estimates.   At the moment, we think that availability of natural gas and foreign currency to finance raw material purchases remains to be of pivotal importance to the company. Given that we were already assuming gas prices would revert to USD7/mmbtu on a terminal basis, we believe the downside to our valuation is limited if the government decides on such a move, which we think is unlikely, given that the recent hike in local steel prices has been justified. We remain buyers of the stock, which is trading at a P/E multiple of 11x in 2016 and an attractive multiple of only 4.5x in 2017. (Al Borsa, Ahmed Hazem Maher)