At present, 500 W or 60 grade rods are being sold at Rs 60,000 to Rs 75,000 per tonne in the country’s market. But even six months ago, the price per ton of rod was 60 thousand to 75 thousand rupees. As a reason for the rise in prices, steel traders are saying that the price of melting scrap, the raw material for rod, has risen sharply.
To reduce the price of rod, the Bangladesh Steel Manufacturers Association (BSMA) has demanded a reduction in the import duty on raw materials from Tk 1,500 to Tk 500 per tonne, advance income tax from Tk 500 to Tk 300 and sales VAT from Tk 2,000 to Tk 500. BSMA made this demand in a notification last Saturday.
According to the Steel Entrepreneurs Association, the main import of rod production in the country is melting scrap, which is 60 to 75 per cent of the demand for melting scrap. The remaining 15-20 percent of the supply comes from within the country. Scrap is imported from the United States, Canada, Australia, South Korea and European countries. However, due to the increase in their own demand due to coronavirus, those countries have reduced their exports. In addition, China produces iron products from its own raw materials, but during the Corona period the country opened up imports of melting scrap. This has had a major impact on global market demand.
The BSMA says the price of melting scrap in October last year wasFrom 300 to US 350 per tonne. At present it has increased from 550 to 590 dollars. That is why several countries, including India, have reduced tariffs on imports of rod raw materials. Entrepreneurs in Bangladesh also think that if the customs duty, advance income tax and value added tax (VAT) rates imposed on the import of these raw materials are not reduced, there will be a crisis in the supply of raw materials in the country’s steel sector. This will cause the price of the rod to increase abnormally.
At present, the amount of duty (CD) per tonne on import of melting scrap is Rs 1,500 and advance income tax (AIT) is Rs 500. In the proposed budget for the financial year 2021-22, 4 percent advance tax imposed at the import stage has been withdrawn. There is not much opportunity to reduce the price of the rod. This is because the rod manufacturers could adjust the advance tax from the VAT of Rs 2,000 per tonne imposed on the rod at the sales stage. Therefore, in order to reduce the price of rod, the traders demanded to reduce the import duty on raw materials from Tk 1,500 to Tk 500 per tonne, advance income tax from Tk 500 to Tk 300 and VAT on sales from Tk 2,000 to Tk 500.
The BSMA said in a statement that the prices of chemical ferro alloys used in rod production have also gone up. Its price has risen from ৮ 600 to ৮ 750 per tonne and is now rising from ৪ 1,400 to ৪ 1,450. Due to the Corona epidemic, container vessels are quarantined for 14 days in all countries. As a result, the rent of raw material supply containers has doubled. Suppliers say container fares will rise further next month. That is why domestic entrepreneurs in the sector say that if the government does not reduce tariffs and taxes, the price of rods will go up further.
The organization claims that many contractors have already slowed down due to rising construction prices. The rise in raw material prices has led to a downturn in the construction sector as a whole. The cement, brick, sand, stone, hardware and tiles factories involved in the construction industry will face disaster. If this problem is not solved, the construction and infrastructural development of the country will be hampered.