Nepal mills actively book Indian sponge iron, billets

Nepal mills have resumed raw materials purchases from India - especially sponge iron and billets, post-declaration of the country's annual Budget.

Nepal's government has imposed import duties on several steel products in its annual Budget announced on 29 May, 2022 in a bid to control foreign exchange outgo amid rising inflationary pressures. The government has proposed controlling inflation within 7% in its NPR 1.79-trillion budget and has emphasized on 'Make in Nepal' and the need to boost domestic manufacturing.

The government has raised import duties on several finished steel products up to 30% to improve domestic production. However, duties on hot rolled sheets and semi-finished steel (billets) have been kept unchanged as Nepal relies heavily on steel imports to fulfill demand. Out of 2.06 million tonnes (mnt) of steel imported by Nepal in CY2021, the share of billets was around 1 mnt followed by flat steel at 650,000 t and longs at 310,000 t.

• With a slight change in duties on sponge iron and billets, the Nepalese steel makers have resumed buying. Collective deals of about 17,000 t were reported this week.
  
  
• About 8,000 t of IF-route billet deals have been reported at around $570-580/t exw eastern India, equivalent to $595-605/t CPT Nepal.
  
  
• Around 9,000 t of sponge iron (70% lumps, 30% fines) export deals were reported to Nepal. FeM 80-81% material fetched prices of $440-445/t, while FeM 78-79% was sold at around $410-420/t exw-eastern India. Freight costs to Nepal stand at $20-25/t. The import duty on sponge iron has been slightly raised to 1% from zero previously. In 2021, the Nepal government had slashed customs tax and excise duty on imported sponge iron to zero for FY2021-22 from 5% earlier, citing the need to facilitate domestic manufacturing growth.
  
  
• In line with the two-fold increase in wire rods import duty, from 5% to 10%, the trade in this material has been impacted. In addition, the Nepal government has also raised the excise duty from NPR 2,500/t to NPR 4,500/t. This led to a pause in major fresh bookings, while fresh offers of IF-route (commercial grade) wire rods were reported at around $745-750/t exw-eastern India, including export duty of 15%.
  
  
• However, the Indian primary mills remained out of the market in terms of offering billets and wire rods to Nepal due to the recent duty revisions and lack of buying interest.
  
  

Domestic rebar offers fall in Nepal

• Fresh offers for 12mm rebar stood at around NPR 98,000/t ($795) on ex-works basis, excluding VAT, down NPR 1,000/t, as per SteelMint's weekly assessment. Domestic demand was subdued, resulting in a slight change in offers, sources based in Kathmandu informed SteelMint.