Sharp fall in scrap vessel import likely to affect local steel industry
Sunday, 16 March 2008
SM Jahangir
The local steel makers are facing severe scarcity of basic raw materials following a sharp fall in their imports mainly due to soaring prices of scraps in the international markets, sources said.
"Overall production of mild steel (MS) products has already declined by nearly 30 per cent over the months due mainly to the shortage of raw materials, caused by their price escalations in the international market," an industry insider told the FE.
General Secretary of the Bangladesh Steel Mill Owners Association (BSMOA) Sk. Masadul Alam Masud also attributed the current raw material scarcities to a sharp rise in the prices of both melting and re-rolling scraps in the global market.
He also predicted a further fall in the production of local steel mills if the current supply shortfall of raw materials persisted.
Sources at the local ship-breaking industry, however, said imports of scrap vessels have sharply declined in recent months mainly due to their price hike in the international market.
Referring to statistics, an informed source said the local ship-breakers imported about 310,228 tonnes of scrap vessel during the July-February period of the current fiscal compared to 1.12 million tonnes in entire 2006-07 fiscal year.
The country imported about 1.01 million tonnes of scrap vessels in 2005-06 while their highest imports were recorded at 1.76 million tonnes in the 2001-02 fiscal, he noted.
The price of imported scrap-vessels rose to US$ 550 per tonne from only $ 350 a year back, the industry operators said.
Normally, imported scrap vessels meet around 25 per cent of the total raw materials used by the local steel makers, they mentioned.
On the other hand, the prices of melting scraps also increased by $ 250 to $ 750 per tonne over the last one year, the industry sources said, adding that prices of some other basic chemicals used for manufacturing steel also went up significantly over the months.
Apart from price escalations of raw materials, the existing uneven import duties between the scrap vessels and melting scraps have also pushed the production cost of steel and iron products significantly up, still makers said.
According to them, the government has fixed the tariff of scrap vessel at Tk 1000 per tonne for ship breakers while the steel and re-rolling millers have to bear about Tk 3800 per tonnes for importing the same.
Considering the situation, the local steel manufactures have already urged the government to remove the exiting duty anomalies in order to help bring the rod prices down by at least Tk 4000 per tonne.
Masud, who is also the General Secretary of the Bangladesh Re-Rolling Mills Association, said the Indian government has already withdrawn all duties on imports of MS scarps, taking the price hikes in the global market into account.
He, however, said the prices of MS rods were now varying between Tk 56,000 and Tk 65,000 per tonne in the local market against Tk 45,000 to Tk 55,000 a few months back, they mentioned.
Meanwhile, the growth of country's real estate and constructions sectors - both under the private and public - has been badly hit by the skyrocketing prices of basic building materials, sources said.
The local steel makers are facing severe scarcity of basic raw materials following a sharp fall in their imports mainly due to soaring prices of scraps in the international markets, sources said.
"Overall production of mild steel (MS) products has already declined by nearly 30 per cent over the months due mainly to the shortage of raw materials, caused by their price escalations in the international market," an industry insider told the FE.
General Secretary of the Bangladesh Steel Mill Owners Association (BSMOA) Sk. Masadul Alam Masud also attributed the current raw material scarcities to a sharp rise in the prices of both melting and re-rolling scraps in the global market.
He also predicted a further fall in the production of local steel mills if the current supply shortfall of raw materials persisted.
Sources at the local ship-breaking industry, however, said imports of scrap vessels have sharply declined in recent months mainly due to their price hike in the international market.
Referring to statistics, an informed source said the local ship-breakers imported about 310,228 tonnes of scrap vessel during the July-February period of the current fiscal compared to 1.12 million tonnes in entire 2006-07 fiscal year.
The country imported about 1.01 million tonnes of scrap vessels in 2005-06 while their highest imports were recorded at 1.76 million tonnes in the 2001-02 fiscal, he noted.
The price of imported scrap-vessels rose to US$ 550 per tonne from only $ 350 a year back, the industry operators said.
Normally, imported scrap vessels meet around 25 per cent of the total raw materials used by the local steel makers, they mentioned.
On the other hand, the prices of melting scraps also increased by $ 250 to $ 750 per tonne over the last one year, the industry sources said, adding that prices of some other basic chemicals used for manufacturing steel also went up significantly over the months.
Apart from price escalations of raw materials, the existing uneven import duties between the scrap vessels and melting scraps have also pushed the production cost of steel and iron products significantly up, still makers said.
According to them, the government has fixed the tariff of scrap vessel at Tk 1000 per tonne for ship breakers while the steel and re-rolling millers have to bear about Tk 3800 per tonnes for importing the same.
Considering the situation, the local steel manufactures have already urged the government to remove the exiting duty anomalies in order to help bring the rod prices down by at least Tk 4000 per tonne.
Masud, who is also the General Secretary of the Bangladesh Re-Rolling Mills Association, said the Indian government has already withdrawn all duties on imports of MS scarps, taking the price hikes in the global market into account.
He, however, said the prices of MS rods were now varying between Tk 56,000 and Tk 65,000 per tonne in the local market against Tk 45,000 to Tk 55,000 a few months back, they mentioned.
Meanwhile, the growth of country's real estate and constructions sectors - both under the private and public - has been badly hit by the skyrocketing prices of basic building materials, sources said.