Nepal is Southeast Asia’s one of the emerging markets for steel and its raw materials amid rapid acceleration of construction work across the country. The growth in Nepal’s construction sector rebounded strongly in 2016 following a good monsoon, reconstruction efforts after the 2015 earthquake and normalization of trade with India.
In fiscal year 2016-17 (15 Jul-16 Jul), the demand for construction materials in the country suddenly skyrocketed after the government lifted the ban on construction of new buildings and houses that were imposed after the earthquake in 2015.
However, as per the latest updates, the steel manufacturers in Nepal claims that the country has become self-sufficient in iron and steel materials due to increased production from old players who have been expanding capacity and new players joining the business.
Kiran Saakh, vice chairman of NSRMA (Nepal Steel Rolling Mills Association), said that the annual demand for iron and steel currently stands at around 2 MnT and domestic producers are supplying the required quantity in the market. In Nov’16, he has mentioned that in the ongoing fiscal year, the market share of Indian iron and steel has gone up in Nepal following excessive demand. Otherwise, the domestic production in the country is sufficient to meet the normal demand of the commodities
The increase in production capacities
As per the local producers, after the earthquake of 2015, Nepali iron and steel companies have been more focused in producing iron and steel materials for reconstruction purpose that assures safety of the structures. The companies are making new investments amid increased development works, boom in the construction of houses and commercial buildings as the iron and steel demand in the country has been increasing by 10% annually.
Domestic iron and steel manufacturers have been producing steel bars, rods and galvanised corrugated sheets for roofing.
Two of the country’s steel producers, Himal Iron and Steel and Jagdamba Steel have also been able to produce 32 mm iron rods that are required for the construction of large hydropower projects and other infrastructure.
Another company, Shalimar Steel recently expanded its production capacity to 25,000 tonnes with an investment of INR 500 million. Panchakanya Group is now capable of producing 100,000 tonnes of TMT steel bars annually by expanding its production capacity recently with an investment of INR 700 million.
Narayani Strips has been producing 150,000 tonnes of TMT bar annually and a new steel company in Birgunj is expected to come online within six months.
Nepal’s steel imports
Nepal’s finish long products import in first four months (Jul-Oct) of FY18 starting from 15 July this year has been recorded at 1.13 MnT, registering a fall of 4% y-o-y basis.
However, it seems that Nepal is still far away from being self-sufficient to meet its flat products requirement as the country imported about 0.23 MnT of flat steel products during Jul-Oct’18, an increase of 35% against the corresponding period of previous year.
In case of raw materials also required to manufacture rebar, the country has to depend upon imports with 90% billet requirement coming from India. During Jul-Oct’18, Nepal has imported about 0.5 MnT of semi-finish, registering an increase of 11% y-o-y basis.
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