Bangladesh Books Major Shipment of Imported Billet Despite Hefty Duty?

Large steel producers in Bangladesh have openly expressed their reluctance to importing steel billet and have claimed that the country is no longer in need for imported material to produce finished long products.

However, if highly placed sources are to be believed, one of the largest steel producers in Bangladesh has reportedly booked a shipment of billet from Qatar recently.

According to a large Indian manufacturer, the long steel producer from Bangladesh had been making inquiries for billets in India as well but had a fallout with an Indian manufacturer over pricing.

If the information was to be true, it would mean that the steel producer from Bangladesh was willing to pay close to USD140/tonne just as duty pushing the procurement cost significantly as compared to locally available billet.

What has happened so far

It was in 2017 that billet imports to Bangladesh dried up completely in the aftermath of a 20% regulatory duty imposed by the national government on overseas purchase of steel billets in addition to 15% VAT.

Since then steel producers have struggled to bolster domestic billet production to meet the growing demand. To a great extent the country has attained virtual self sufficiency in billet production however this has been achieved solely through the induction furnace route and with the use of imported scrap.

This has left Bangladesh facing two major challenges. First being the sever congestion on its sea port which has been overburdened with bulk shipments of imported scrap and the second is limited availability of high strength steel.

Possible reasons to import billet

Need for Special Steel: One of the most compelling reasons could be the need for High Strength and Advanced High Strength steel grades. Presently there are a number of infrastructure projects underway in Bangladesh that could require HSS grades such as the Rampal Power Plant and Padma Bridge project--one of the most challenging construction projects undertaken in the country till now. The need for HS grade steel may have compelled the Bangladesh steel producer to procure imported material.

Foreign Funded Projects: There may also be a possibility of the project receiving a respite from Bangladesh authorities for import of billet, being a foreign funded project with contributions from World Bank, Asian Development Bank, Japan International Cooperation Agency and reportedly even China's Exim Bank.

Scrap Shortage: Another possible reason could be a combination of scrap unavailability in the global market after imposition of tariff on steel in the USA and/or congestion at ports. Under the present scenario it remains to be seen if other producer would follow suit or the reported deal for billet remains a one off consignment, needed for limited use.

It may be noted here that Billet export to Bangladesh from India was, until recently, a major source of revenue for Indian steel manufacturers. However, the sudden levy of duty had closed the market for Indian producers.