Bangladesh: Steel Producers Urge Govt to Cut Import Duty on Scrap
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Bangladesh Steel makers in the previous week of the month has requested the government for reducing the customs duty and advance income tax(AIT) on the import of scraps to control the rising prices in the local market. At present, the customs duty for scraps is Taka 1,500 per tonne and AIT Taka 800.
In a recent press conference in Dhaka Manwar Hossain, chairman of the Bangladesh Auto Re-rolling and Steel Mills Association, has pressed the need for lowering the customs duty to Taka 500 and AIT to Taka 400.
The recent US tariff of 25% on steel has spiked the steel rod prices to a new high amid the spiraling of scraps prices in the international market.
According to Hossain "U.S., the world's largest economy, generates 60 percent of the global scraps, and American millers have been stockpiling it upon anticipation of the protectionist move by Trump administration, escalating the prices in the global market. The price of each tonne of scrap, which was USD 310/t in the third quarter of 2017, now stood at USD 435/t".
According to BARSMA "Bangladesh requires about 4 million tonnes of scraps to make billet for manufacturing steel".
"Of the sum, 3.5 million tonnes are imported and the rest is collected from ship-breakers and domestic market", according to Tapan Sengupta, executive director of BSRM, one of the biggest steel manufacturers in Bangladesh.
Hossain added that "also, the production costs for per tonne of steel have increased by Taka 1,708 due to the appreciation of the dollar against the Taka and Taka 700 for the increase of interest rate from 9 % to 12 %. If the situation goes on like this for another 2-3 months, the prices would further sharply rise."
"In the beginning of January, each tonne of 60-grade rod sold for Taka 53,500 - 54,500 in Dhaka city. In April, the rod sold for Taka 71,000- 72,000", according to the Trading Corporation of Bangladesh.
Hossain, who is also the MD of Anwar Ispat Ltd added, "that the rod prices were recently reduced by Taka 3,000 per tonne after the government assured steel manufacturers that their demands would be met. If the government cut down customs duty and AIT the price would come down by Taka 5,000 per tonnes".
Rising melting capacities
Bangladesh - one of the world's emerging steel markets, has witnessed significant hike in its ferrous scrap imports in this fiscal with rising steel capacities. According to data maintained by SteelMint, Bangladesh imported around 2-2.5 million tonnes of scrap in 2017 against 1.7 million tonnes in 2016.
Out of the total sum, around 60% is imported in containers and 40% through bulk shipments. Scrap imports to Bangladesh is to increase further in coming years owing to new steel making capacities being built up.
