Re-rolling mills owners divided over MS rod import
Saturday, 18 April 2009
Jasim Uddin Haroon
Some of the country's re-rolling mill owners have started importing finished mild steel (MS) rods as the prices have drastically declined in the international market.
Moreover, the abolition of 15 per cent VAT and reduction of import duty from 25 per cent to 7.0 per cent by the past government to facilitate the real estate businessmen during that period of sky-rocketting prices of building materials, have encouraged the local M.S rod manufacturers to start importing.
Currently, the international price of 60-grade M.S rod is around US$ 550 a tonne on an average while the retail price of locally produced same quality product is around Tk. 50,000 per tonne.
Sources said GPH Ispat Limited, Kabir Steel and Re-rolling Mills (KSRM) and Naher Steels had opened letters of credit (L/Cs) for import of over 62,000 tonnes of steel products from Turkey and India.
Port intelligence told the FE that the first consignment of M.S rod is expected to arrive at Chittagong port outer anchorage today (Saturday) carrying over 20,000 tonnes of rod.
However, a section of rod manufacturers belonging to two organisations -- Bangladesh Re-rolling Mills Association (BRMA) and the Bangladesh Steel Mills Owners Association (BSMOA) -- had already met the industry minister Dilip Barua and the Chairman of the National Board of Revenue (NBR) on April 13 to lodge their protest against the import of rod.
They will meet finance minister AMA Muhith and commerce minister Faruk Khan tomorrow (Sunday) to seek government protection for the local steel mills, which employs over 150,000 people.
Md Bashir Ullah, secretary general of BSMOA told the FE: "This is a suicidal move by our fellow members. This will completely destroy our industry."
Mr Bashir also said Bangladesh is self sufficient in meeting domestic demand adding: "Even our factories are now equipped to produce quality rods having earthquake resistance capacity."
Mohammed Humayun Kabir, managing director of the Best Steel Limited at Pagla in Narayanganj told the FE: "We have come to know that the imported rods are of low quality produced in a Middle-Eastern country."
Some rod producers, however, claimed the rod manufacturing nations including Turkey had got adequate stimulus package for their industry amid recession and their current prices are much below the actual production cost.
Aameir Alihussain, director of the BSRM Group, the largest rod producing company, told the FE: "The demand for rod has fallen in rich nations following the recession. For this reason, rod exporting nations are now trying to divert their products to the less recession-hit countries like Bangladesh."
Sheikh Masudul Alam, former general secretary of the BRMA told the FE the government should immediately re-slap import duty and value added tax on the import of finished steel products.
Md Zafar Ahmed, president of Bangladesh Ship Breakers Association (BSBA) said the import of MS rod will also affect the ship breaking industry as its main consumers are the local re-rolling mills.
Bangladesh has around 300 steel producing factories including 200 re-rolling mills and their investment is more than Tk 100 billion.
Apart from this, around Tk 1.5 billion more investment is in the pipeline in the sector.
Country's demand for MS rod is around 2.0 million tonnes and the quantity is met by the local factories. Chittagong-based Bangladesh Steel and re-rolling Mills (BSRM) Group is the market leader, accounting for almost one fifth of the local demand.
Some of the country's re-rolling mill owners have started importing finished mild steel (MS) rods as the prices have drastically declined in the international market.
Moreover, the abolition of 15 per cent VAT and reduction of import duty from 25 per cent to 7.0 per cent by the past government to facilitate the real estate businessmen during that period of sky-rocketting prices of building materials, have encouraged the local M.S rod manufacturers to start importing.
Currently, the international price of 60-grade M.S rod is around US$ 550 a tonne on an average while the retail price of locally produced same quality product is around Tk. 50,000 per tonne.
Sources said GPH Ispat Limited, Kabir Steel and Re-rolling Mills (KSRM) and Naher Steels had opened letters of credit (L/Cs) for import of over 62,000 tonnes of steel products from Turkey and India.
Port intelligence told the FE that the first consignment of M.S rod is expected to arrive at Chittagong port outer anchorage today (Saturday) carrying over 20,000 tonnes of rod.
However, a section of rod manufacturers belonging to two organisations -- Bangladesh Re-rolling Mills Association (BRMA) and the Bangladesh Steel Mills Owners Association (BSMOA) -- had already met the industry minister Dilip Barua and the Chairman of the National Board of Revenue (NBR) on April 13 to lodge their protest against the import of rod.
They will meet finance minister AMA Muhith and commerce minister Faruk Khan tomorrow (Sunday) to seek government protection for the local steel mills, which employs over 150,000 people.
Md Bashir Ullah, secretary general of BSMOA told the FE: "This is a suicidal move by our fellow members. This will completely destroy our industry."
Mr Bashir also said Bangladesh is self sufficient in meeting domestic demand adding: "Even our factories are now equipped to produce quality rods having earthquake resistance capacity."
Mohammed Humayun Kabir, managing director of the Best Steel Limited at Pagla in Narayanganj told the FE: "We have come to know that the imported rods are of low quality produced in a Middle-Eastern country."
Some rod producers, however, claimed the rod manufacturing nations including Turkey had got adequate stimulus package for their industry amid recession and their current prices are much below the actual production cost.
Aameir Alihussain, director of the BSRM Group, the largest rod producing company, told the FE: "The demand for rod has fallen in rich nations following the recession. For this reason, rod exporting nations are now trying to divert their products to the less recession-hit countries like Bangladesh."
Sheikh Masudul Alam, former general secretary of the BRMA told the FE the government should immediately re-slap import duty and value added tax on the import of finished steel products.
Md Zafar Ahmed, president of Bangladesh Ship Breakers Association (BSBA) said the import of MS rod will also affect the ship breaking industry as its main consumers are the local re-rolling mills.
Bangladesh has around 300 steel producing factories including 200 re-rolling mills and their investment is more than Tk 100 billion.
Apart from this, around Tk 1.5 billion more investment is in the pipeline in the sector.
Country's demand for MS rod is around 2.0 million tonnes and the quantity is met by the local factories. Chittagong-based Bangladesh Steel and re-rolling Mills (BSRM) Group is the market leader, accounting for almost one fifth of the local demand.