The Tunisian steel market: a wait-and-see approach

Tunisian consumption of finished steel will remain at 720,000 tonnes in 2026

There is no potential for growth in demand for steel in Tunisia due to severe budgetary constraints. There are no large-scale government programmes for housing and infrastructure construction here, as there are in neighbouring Algeria, Egypt and Morocco. There is also a lack of foreign investment. This has resulted in steel consumption remaining stable at between 670,000 and 730,000 tonnes over the last few years.

Market Profile

Long products account for 70–75% of finished steel sales. These are predominantly reinforcing bars and wire rod. Flat products are estimated to account for 20%. For the most part, this consists of hot-rolled coils (HRC) for the production of steel structures and steel pipes for water supply infrastructure.

Tunisia has a large trade deficit. However, imports cover only 40% of the demand for rolled steel. A significant proportion of imports consists of semi-finished products for local rolling mills.

Turkey firmly holds first place in terms of supplies of billets and structural steel bars thanks to its free trade agreement with Tunisia. This agreement provides duty-free access for Turkish steelmakers and traders.

Italy, France and Spain are suppliers of flat steel, oil and gas pipes, as well as finished steel structures. Chinese and Indian producers are attempting to compete with them in this segment.

Steel exports from Tunisia are sporadic. When local mills have a surplus of reinforcing bars and prices in Italy and Spain become more attractive than domestic prices, small consignments are sent there. Small volumes are also shipped to neighbouring Libya and Algeria. This takes place within the framework of cross-border trade.

Demand for finished steel products

Residential construction accounts for 55% of steel sales. Approximately half of the work in the sector consists of private self-build housing. This is common in the suburbs and rural areas. Such properties are built ‘by eye’ without any formal design, using the cheapest reinforcing bars.

The other half of the market is accounted for by property developers. They build shopping and office centres, as well as medium-rise residential complexes in major cities such as Tunis, Sfax, Sousse and Bizerte. Such projects are subject to technical supervision, and developers purchase certified reinforcing bars for them. High-rise construction is restricted by seismic regulations.

Tunisia has a state housing programme, SNIT, administered by the state agency of the same name. However, due to budgetary constraints, its impact on the market is minimal. Each year, 4–5 thousand housing units are commissioned under the SNIT programme.

Tunisia’s infrastructure sector is incomparable in scale to that of Egypt, Algeria or Morocco. The main projects in recent years have been the construction of a new bridge in Bizerte and the modernisation of railway lines No. 22 and No. 6.

The current completion rate for the main bridge in Bizerte stands at 25%. It is 2.1 km long and rises 60 metres above water level. The project is costing €250 million, with funding provided by the European Investment Bank and the African Development Bank. Construction is being carried out by the Chinese state-owned corporation SRBG.

The access roads are now 75% complete. These consist of two high-speed sections of motorway with a total length of 7.2 km. The work is being carried out by Tunisian companies. The entire project is scheduled to be commissioned in September 2027.

The cost of modernising the railway lines is €185 million, allocated by the European Bank for Reconstruction and Development. Line No. 22 is at the most advanced stage of implementation. Construction of a second track is underway on the 22-km ‘Moknin–Mahdia’ section. On Line No. 6, work is continuing on dismantling the track superstructure on worn-out sections and preparing embankments on new sections. These need to be laid to align the route’s geometry, with the aim of improving safety and increasing train speeds.

For these projects, local steel producers supply only simple steel structures. Technical standards require the use of high-quality steel grades, so rolled steel is imported.

The pipe sector is a major consumer of flat-rolled steel in Tunisia. Total production capacity stands at 75–90 thousand tonnes per year. The sector is entirely dependent on imports of coiled steel. Capacity utilisation is determined by the affordability of hot-rolled coils from Italy, China and India, as well as the current level of construction activity.

The influence of local players

The only integrated producer is the state-owned El Fouladh in Menzel Bourguiba. It operates using scrap-based electric arc furnace (EAF) technology. Its annual capacity for steel and rolled products is the same: 200,000 tonnes. It specialises in reinforcing bars and wire rod.

The sector is also represented by rolling mills:

• Intermetal in Radès, with an annual capacity of 300,000 tonnes. It produces reinforcing bars and wire rod using Danieli equipment.
• SM Tunis Acier is located in the Bizerte industrial park. It has an annual capacity of 200,000 tonnes and produces cold-rolled (CRC) and hot-dip galvanised (HDG) rolled steel. It is a joint venture between the Italian companies Marcegaglia and Sideralba.
• SMC in Monastir, with an annual capacity of 150,000 tonnes, produces rebar and wire rod.

Domestic steel production covers only 15–20% of the rolling mills’ requirements. They operate primarily on imported semi-finished products. The underutilisation of rolling capacity reflects stagnation in the construction sector.

The investment strategy of Tunisian producers for 2021–2025 was targeted.

• SM Tunis Acier invested in improving the efficiency of its CRC and HDG production lines. The estimated investment for 2022–2025 is €20–50 million.
• Intermetal carried out a phased modernisation of its rolling mills. Investment in these projects for 2021–2025 amounted to €10–25 million.
• El Fouladh maintained its current capacity through the refurbishment of its electric arc furnaces.

The role of the state

The authorities are compelled to support El Fouladh’s operations, given its social importance. The plant itself is chronically loss-making due to the wear and tear of its equipment. From time to time, the government allocates funds to settle its debts, purchase a minimum volume of scrap and pay wages.

Private rolling mills are granted relatively flexible customs arrangements for importing billets, given the critical domestic shortage of this material.

Sales guarantees for local players are ensured through the protection of the domestic market from imports and preferential treatment in public procurement. It works something like this.

• Tariff barrier. The basic rate of duty on imports of finished rolled steel from countries that do not have a free trade agreement (FTA) with Tunisia is 15–20%.

Most steel imports into Tunisia come from Turkey and the EU, for which a zero duty rate applies under the FTA. Any undesirable increase in supplies from these sources is blocked by non-tariff measures.

• Steel import licensing. This is periodically introduced by the Ministry of Trade and Export Development, in agreement with the Ministry of Industry, in the event of a fall in domestic demand. Currently, this regime applies to imports of finished rolled steel.

Government Decree No. 2014-1039 of 13 March 2014 sets out the provisions regarding national preference in public procurement. Under this document and the earlier Decree No. 99-825, public contracting authorities may, when evaluating tender bids, apply a price surcharge to bids from foreign participants or grant a percentage discount of up to 10% on locally sourced products.

In major infrastructure projects, tender documentation must include requirements to engage local subcontractors and use domestically produced materials, where available.

The actual impact of these preferences on the steel sector is minimal. The main clients for infrastructure projects – the state-owned energy company STEG and the water utility SONEDE – suffer chronically from a lack of budgetary funds and debt. Local steel producers are reluctant to participate in state tenders due to payment delays. They prefer to work with the private sector and the retail sector, where cash flow is rapid.

Steel consumption forecast

In theory, Tunisia could at least double its demand for finished steel thanks to foreign investment. For example, the construction of the Enfida deep-water port, planned as the largest hub in the Mediterranean with a 5 km-long quay and a depth of 17–20 m at the berth, would be capable of accommodating giant container ships.

The project was officially unveiled back in 2008, but it never got off the ground. Attempts to revive it were made between 2015 and 2019. At that time, investors were put off by the political instability in Tunisia. By 2023, they had declined offers to participate in the tender, citing ‘unacceptable financial terms and Tunisia’s lack of transparency in its legislation’.

For the same reason, there are doubts about the implementation of the government’s plan to build new wind farms totalling 1.7 GW by 2030. In Tunisia, there is a chasm of bureaucracy, funding problems at the state-owned company STEG and endless tariff approvals between ‘signing a memorandum in front of the cameras’ and ‘pouring the first cubic metre of concrete for a turbine’. Consequently, the wind energy sector there currently operates in a state of perpetual promises. New projects are stuck at the ‘we are looking for investors and assessing the risks’ stage.

The drivers of steady demand remain unauthorised private housing construction, the bridge in Bizerte, railway lines No. 6 and No. 22, and the planned replacement of the water supply infrastructure. According to estimates by the African Development Bank, Tunisia’s construction sector will see growth slow to 0.6% in real terms in 2026, down from 3.7% in 2025. This implies that steel sales volumes will remain at last year’s level of 720,000 tonnes.