Nepal: Steel mills lift rebars offers on demand uptick, higher import offers

On the back of falling inventories in the trader segment and higher import offers of sponge iron and billets, Nepal-based steel mills raised rebars offers this week by around NPR 1,000-1,500/t ($8-11). Current rebars (12mm) prices in Nepal are reported at around NPR 91,000-93,000/t ($690-700) exw, excluding VAT.

Import offers to Nepal rise tracking hike in Indian prices

• Sponge iron bookings remain active - 5,500t of P-DRI export deal for Nepal from Durgapur by road was concluded at $370-375/t ex mill (equivalent to $400 CPT). In another deal, 12500t of CDRI (79 Fem 70:30) for Nepal was booked at $400-402/t LTW from Odisha at $420-422 CPT.
  Sponge prices, too, are increasing due to an apprehension of supply tightness in Odisha - a key market. The Odisha State Pollution Control Board has issued a notification mandating closure of all sponge iron plants in Rourkela from 5 January to 31 January with the aim of maintaining good air quality during the upcoming Hockey World Cup to be held in the state. Hence, industries and services culpable of coal-based emissions have been mandated to either stop or restrict operations.
  
  
• Import offers from Indian primary mills rise by around $20 w-o-w - BF-route billet offers from India were reported at $590-600/t CPT Nepal, after few deals being reported at $580-585/t CPT Nepal last week. Fresh offers of IF-route billets from India stand at $580/t CPT Nepal. Offers have increased by around $15-20/t w-o-w. Moreover, current offers for BF-route wire rods were assessed at around $645-650/t CPT Nepal, rising by around $25 w-o-w.
  
  
• HRC import bookings reported - Indian HRC export offers to Nepal raised offers last week by INR 1,000/t w-o-w to INR 51,000/t landed Nepal. A deal for two rakes was reported at these price levels, according to market sources.
  
  

Nepal's sponge iron imports double in 2022: Sponge iron import volumes steadily rose from a mere 110,000 tonnes (t) in 2017 to 0.26 mnt in 2021 and spurted to 0.54 mnt in 2022. Nepal has a reason for the rise in DRI consumption. It is doing so at the cost of lifting less of billets. The country's mills have been increasing their melting capacities. As a result, these mills are preferring to manufacture billets using sponge iron rather than importing semi-finished steel. Thus, imports of billets fell from 1 mnt in CY21 to 0.46 mnt in CY22.

With steel demand of roughly 2.5 mnt per annum, Nepal has been focusing a lot on reconstruction. The country's construction sector is said to contribute around 10-11% to its GDP. In addition, Nepal imports nearly 1-1.5 mnt of semi-finished steel and 1 mnt of finished steel annually (both flats and longs) with India being the largest supplier with a share of 95%.

To know more about changing market dynamics in Nepal's steel industry, book your seat at the 2nd Nepal Trade Summit, to be held on 1-2 March, 2023.