Bangladesh Govt to hold back 15% VAT on Steel Bars

– Bangladesh Govt to hold back its decision to implement 15% VAT on steel rods

– Domestic Re-bar prices may fall

– Bangladesh mills will prefer scrap over Billet imports

Bangladesh govt to hold back its decision to implement 15% uniform VAT on steel rods, which was proposed in the federal budget announced on 1st June 2017, according to local sources.

Steel rods were categorized under special category and VAT was being charged at a flat rate of 900 taka per tonne. Later, in the budget Bangladesh government had proposed a uniform VAT of 15% on most of the commodities including steel rods.

With several representations made to government by Bangladesh steel mills , govt has decided to hold its decision for next two years.

Local steel prices had increased sharply after the proposal but it is expected to come down soon. Current offers for 12-32mm re-bars are hovering at around taka 53,000-54,000/MT (Incld VAT).

However, some millers said the prices are unlikely to decline owing to a spiral in the prices of scrap, the raw material for steel and the imposition of 5 percent regulatory duty on it from this fiscal year.

But some said the increased supply when all mills will start production in full swing in 10 to 15 days may cause the prices of steel to decline marginally.

Bangladesh mills will prefer scrap over Billet imports

In earlier articles SteelMint reported that, with imposition of 15% VAT on steel rods will open up billet imports for Bangladesh. As VAT paid on imports of billet will be adjusted with the VAT collected on sales of rods.

However with government’s decision to hold its decision will not encourage billet imports. Bangladesh mills will prefer steel melting rather than importing billets, which attracts a regulatory duty of 20% plus VAT.

Bangladesh Billet imports fall; Scrap and HBI imports increase

Bangladesh – one of the emerging country observed sharp increase in bulk scrap and HBI imports in its FY17 (Jul’16-Jun’17). On the other hand country’s billet imports have reduced sharply in last fiscal.

According to provisional customs data maintained with SteelMint, total bullk ferrous Scrap imports in Bangladesh hiked by 42% Y-o-Y to 803,014 MT in FY17, which was just 469,010 MT in FY16. On similar lines, HBI imports to Bangladesh went up by 24% Y-o-Y to 269,860 MT in FY17 against 204,300 MT in previous fiscal.

Further, total imports of billet in Bangladesh declined sharply in FY17 compared to previous fiscal. 352,800 MT billet was imported to Bangladesh in FY17 against 992,180 MT in FY16.