Nepal: Billet imports fall by over 60% in Jan-Mar'22 as mills increase sponge sourcing
Nepal’s semi-finished steel (billets) imports saw a sharp decline in the first quarter of CY’22 (Jan-Mar’22). Total billet imports sat at 149,192 t duri...
Nepal's semi-finished steel (billets) imports saw a sharp decline in the first quarter of CY'22 (Jan-Mar'22). Total billet imports sat at 149,192 t during the period, falling by over 61% as against 385,402 t in the corresponding period last year (CPLY).
India was the only exporter of steel billets in the period under review.
Imports of other steel products
- Finished long steel: Total finished long steel imports by Nepal decreased by 41% y-o-y to 57,604 tonnes (t) in Jan-Mar'22. Out of total volumes, wire rods imports stood at 48,031 t (down 39%), structurals at 9,307 t (down 49%) and rebar at 265 t (down 55%).Finished long steel imports came only from neighbouring India in the quarter under review.
- Finished flat steel: The country imported a total of 146,322 t of finished flat steel in the Jan-Mar quarter, a drop of 20% compared to 182,078 t in CPLY. Out of total imports, HRC and plates stood at 93,400 t, CRC at 10,976 t, galvanised steel at 4,506 t, electrical steel at 779 t and the remaining 36,661 t comprised other finished products.All finished products were imported only from India.
Sponge iron imports
The country's sponge iron imports registered a sharp 122% q-o-q growth to reach 144,627 t in Q1CY'22 compared to 65,144 t in CPLY with India being the lone exporter.
Nepal is a top importer of Indian steel products. However, in the past few months, its imports of sponge iron from India have risen.
Factors behind decrease in steel imports
- Rise in melting capacities: Nepal has substantially increased sponge iron sourcing from India after the government removed customs duty on the material. Mills are focussed on increasing their melting capacities for domestic billet production.
- Mills in expansion mode: Taking advantage of the duty removal, several steel producers in Nepal are either planning to expand their existing capacities or setting up their own induction furnaces to reduce production costs.
- Domestic billets available at low rates: Demand for domestically-produced billets increased as these were cheaper compared to imported billets. The price gap between domestic and imported billets (landed cost) was assessed at around $40/t.
- High steel prices weigh on imports: Nepal's finished steel imports reduced because of high steel prices globally.
Outlook
It is highly likely that Nepal will increase its sponge iron imports, taking advantage of the duty removal. As a result, billet imports will decrease. Meanwhile, imports of other steel products are expected to see a decrease in the coming months.