Nepal: Sponge iron imports rise over 65% y-o-y in 9M CY'23

Nepal has seen considerable growth in the Scrap and metallics i.e. sponge iron and pig iron imports. During the first nine months of CY'23 (January-September), Nepal saw a significant increase in its import of sponge iron, with a rise of 66.7%, and pig iron import also experienced a notable growth of 39% compared to the same period in the previous year, 2022.

In Jan-Sept'23, Nepal recorded 6,71,900t of sponge iron and 51,715t of pig iron imports, respectively. On the other hand, billet imports to Nepal fell by 50% y-o-y to 216,160t during Jan-Sept'23.

Reasons behind hike in sponge imports:

The main cause of nation's continuous rising import is rise in melting capacity.

In year 2022, the government of Nepal imposed import duties on various steel products in an effort to reduce country's foreign exchange expenditure, combat rising inflationary pressure, and create jobs. On various products such as billets, wire rods and structural steel the excise duty was increased from previous year. The excise duty on billets was increased from NPR 2500 to NPR 3500.

Steel products made in India such as wire rods and Indian wire rods manufacturers of both IF and BF routes are concerned due to 15% imposed duty on steel products. Indonesia has given quite aggressive offers in result to which India barely made any offers.

Outlook: Sponge iron imports to Nepal are likely to remain supported. However, billet import bookings may slow down given the higher realisations in the Indian domestic market.