Top 5 steel exporters to Nepal in 2022

Nepal's steel import volumes halved from 2.06 mnt in CY'21 to 1.09 mnt in CY'22. India has continued to remain the largest source of imports owing to geographical benefits.

Country-wise steel imports

India remained the largest source of steel imports for Nepal with a share of 95% in the country's total imports.

• According to data compiled by SteelMint, Nepal's imports of steel from India appear to have declined from 1.99 mnt in CY21 to 1.02 mnt in CY22. Between CY21 and CY22, this reflects a decline of around 49% y-o-y in steel imports from India.
  
  
• Nepal's steel imports from Indonesia were reported to be around 0.03 mnt in CY22, which is a positive trend for the Nepalese steel industry. However, despite an overall decrease in Nepal's steel imports, there has been an interesting development in recent months with an increase in imports from Indonesia. Specifically, there has been an increase in wire rod imports due to cost-effective landed offers. This is an indication that the market for steel in Nepal is dynamic and subject to change as various factors come into play. The increase in imports from Indonesia is likely due to a combination of favorable pricing and product availability.
  
  
• Similarly, as per data maintained with SteelMint, Nepal's steel imports from Malaysia and China were around at 0.02 mnt and 0.01 mnt in CY22, respectively.

  
  
  

Commodity wise steel imports

• Finished longs: As per data maintained with SteelMint, it appears that Nepal's steel imports of finished longs decreased from 0.31 mnt in CY21 to 0.17 mnt in CY22. This represents a significant decrease of about 45.2% in steel imports of finished longs between CY21 and CY22.
  
  
• Finished flats: According to records kept with SteelMint, Nepal's imports of finished flat steel appear to have declined from 0.65 mnt in CY21 to 0.46 mnt in CY22. This reflects a drop in steel imports of finished flats between CY21 and CY22 of roughly 29.2%.
  
  
• Semi-finished: According to SteelMint's data, Nepal's imports of semi-finished steel fell from 1.09 mnt in CY21 to 0.46 mnt in CY22. This shows a considerable decline in semi-finished steel imports between CY21 and CY22 of around 57.8%. 
  
  

Reasons behind fall in steel import volumes

• India's export tax impact: India's steel sector was significantly impacted by the sudden application of the 15% export tax on finished steel commodities starting on May 22, 2022. The government introduced the levy in an attempt to ease inflationary pressures. India's exports fell drastically after the tax was implemented as mills scrambled to find a way to avoid it. However, the tax was abruptly removed in the third week of November of last year, which helped to significantly increase December volumes.
  
  
• Drop in global demand: Russia declared war on Ukraine on February 24, last year, before the world could recover from the Omicron wave of the pandemic, which began in late 2021. Western sanctions against Russia, as well as subsequent energy politics, have had an impact on energy supply trends and prices. As the prices of crude oil, natural gas, and coal increased, inflationary pressures gripped most of the world, particularly Europe, and the threat of a recession loomed large. Steel demand fell precipitously, impeding Indian mills and exporters' ability to sell overseas. As a result, according to SteelMint's data, global steel trade fell by 15% last year.
  
  
• LC issues plague Nepal: Nepal too has been challenged by a falling currency, which has depleted foreign exchange reserves, making it difficult for importers to open new letters of credit (LC) last year.
  
  

India's steel exports are seen increasing in the short to medium term post export duty rollback in India.

To gain a deeper insight into the changing dynamics of Nepal's steel industry, book your seat at the 2nd Nepal Trade Summit to be organised by SteelMint Events on 1-2 March, 2023 in Soaltee Crowne Plaza, Kathmandu.