Staff Reporter :
The country’s steel manufacturers have urged the Revenue Board to completely withdraw the Value-Added Tax and Advance Income Tax (AIT) on imported raw materials used in finished goods in a bid to control unusual steel price hike.
The Bangladesh Steel Manufacturers’ Association (BSMA) came up with the plea in a recent letter to the National Board of Revenue (NBR) chairman.
In the letter, BSMA said that the prices of raw materials and chemicals for M S iron have been increased abnormally in the international markets for the disruption of supply chain amid the ongoing Covid-19 pandemic.
In Bangladesh, 90 per cent of the raw materials (melting scrap) used in steel production are imported from the US, Canada, Italy, UK, and Australia. But the supply of the melting scrap has declined significantly in the countries due to the pandemic.
The prices of melting scrap have increased to $550-590 from $300-350 per tonne, while prices of ferro alloys, main chemical for M S steel, have increased to $1400-1450 from $800-850 per tonne in the international markets.
On the other hand, the shipping cost has doubled due to the container shortage.
Under this circumstance, India has withdrawn the duty on scrap import to save the steel industry.
“So, we think that the price of steel is likely to increase unusually in the domestic market, if VAT and the AIT are not reduced,” according to the BSMA letter.
Md Shahidullah, Secretary General of the BSMA and Managing Director of Metrocem Steel, told The New Nation, “The government had thought that the cut in the tax at source would lower the price of steel to some extent and reduce the cost of infrastructure and construction projects.”
The steel price has increased as melted steel has become costlier in the international market in the recent time due to the pandemic, he said.
He further said India, China, and the US use melted steel as raw materials to manufacture steel products. Earlier, manufacturers would produce steel from iron ores. Now Chinese steelmakers use scrap steel to make the finished products.
“So, the price of steel will be increased further, if the NBR does not withdraw VAT and AIT fully,” Shahidullah said.
The shipping cost has risen to $2600 per container, way higher than $1,200 a year ago. A container can carry 26 tonnes of scrap steel.
Bangladesh imports 45 lakh tonnes of scrap steel annually. Another 10 lakh tonnes is collected locally.
There are about 40 active manufacturers with a combined capacity to produce nine million tonnes of steel a year.
