Steel Authority of India Ltd (SAIL), India’s largest and state owned steelmaker, has upheld its 15,000 MT billet export tender, which expired last week.
Sources say, the company hold its tender due to MIP (minimum import price) imposed by Indian government on 5 Feb’16, which in turn has pushed domestic prices higher.
Bids were heard to be in the range of USD 260-270/MT, FoB Haldia Port. However, cargoes haven’t been awarded to anyone. Exporters, who bid for this tender, are expected to take cargoes to Bangladesh. Vessel freight from Haldia to Chittagong (Bangladesh) is around USD 18-20/MT.
The company’s last two tenders of 15,000 MT each were concluded at USD 258-261/MT and USD 253 /MT, FoB Haldia Port in the month of Nov’15 and Dec’15 respectively and were shipped to Bangladesh.
Demand for Indian billet increases on SAFTA agreement
Indian billet demand to Bangladesh has increased on account of South Asian Free Trade Area (SAFTA) agreement, which attracts zero duty for SAARC nations. Current duty for importing billet from SAARC nations is zero, but for other nations is around USD 90/MT.
What is SAFTA agreement?
SAFTA is a trade agreement amongst SAARC eight nations viz Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka and Afghanistan. This agreement is done to promote trade and economic growth in South Asia by reducing tariffs for intra-regional exports.
The SAFTA agreement came into force on 1 Jan’06 and is operational following the ratification of the agreement by the seven governments. SAFTA requires the developing countries in South Asia (India, Pakistan and Sri Lanka) to bring their duties down to 20% in the first phase of the 2-year period till 2007. In the final 5-year phase ending 2012, the 20% duty will be reduced to zero in a series of annual cuts.
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