Raw steel is nation largest import-Real estate growth fueling demand

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Then nation had imported iron and steel worth Rs 33.89 billion and petroleum products worth Rs 55.66 billion in 2009/10.

The big rise in imports of iron and steel was recorded at a time when the growth of real estate sector - the major consumers of iron products such as iron wire and rods - has been slowing for the last one year due to tightening of loan flow on realty sector.

Imports of petroleum products, which covered more than 15 percent worth of the total imports, dropped by 6.8 percent to Rs 17.85 billion during the first four months compared to Rs 19.17 billion during the corresponding period last year.

Similarly, import of gold - the nation´s largest import during the first four months of last fiscal year with the import volume touching Rs 19.26 million -- dropped by more than 14 times to Rs 1.33 billion, thanks to the government´s tight import policy. Nepal had imported gold worth Rs 41.45 billion in 2009/10.

Commenting on the whopping rise in import of iron and steel, rolling mills operators said producers might be preparing themselves to maintain supplies during peak construction season that begins from mid-January. “Keeping in view the long load-shedding hours in coming months, rolling mills might have imported large volume of iron and steel in the previous months to maintain adequate stock of raw materials,” Sahil Agrawal, promoter of Jagadamba Steels told Republica on Sunday.

A total of 22 rolling mills are presently in operation in different parts of the country.

Yaksha Dhoj Karki, president of Federation of Contractors´ Associations of Nepal (FCAN), said massive construction activities carried out by both the government and the private sector have pushed up the demand for steel, leading to huge rise in imports.

“More than 40 percent of the total constructions activities in a year are carried out between January and March. Huge imports of iron and steel were made in advance to cater to the demand during the peak season,” Karki added.

Housing developers, who are the major buyers of rods and iron products, said rapid growth in the sector has fueled demand for iron and steel, prompting rolling mills to scale up imports.

“Companies that had already opened booking for apartments are busy developing projects. They have stocked construction materials required for more than six months,” said Min Man Gurung, general secretary of Nepal Housing Developers´ Association.

Tulsi Prasad Sitaula, joint secretary at the Ministry of Physical Planning and Works (MoPPW), told Republica that construction of a large number of bridges across the country was underway. “We are constructing more than 200 bridges this year, up from less than 150 in the last fiscal year,” Sitaula said, adding that about 150 quintals of rods is required to construct a 100 meters long bridge.

Trade experts opine that soaring prices of iron ore in international market is another major factor behind whopping rise in value of iron and steel imports during the period. Price of iron ore shot up to 184.61 cents per dry metric ton unit (DMTU) in December 2010, up from 95.95 cents recorded in the same month of 2009.

source: Ghimire, Prabhakar (2011),"Raw steel is nation's largest import ", republica, 10 Jan 2011

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