Bangladesh steelmakers are preferring imported scrap over billet due to differential duty structure. Scrap attracts an import duty of BDT 1,500/MT (USD 19/MT). Whereas, billet attracts an import duty of BDT 7,000/MT (USD 90/MT).
In the last union budget, Bangladesh government has increased import duty on billet from BDT 5,000/MT to BDT 7,000/MT in order to promote steelmaking in the country.
Steelmakers believe that it make sense to import scrap over billet, looking at duty structure. However, Chinese billets are still making their way to Bangladesh market owing to lower offers.
Question is how long will Chinese suppliers keep their offers low?
Bangladesh imports around 1.5-2 million tonnes of billet annually. It is expected that billet imports will fall eventually in coming years.
Bangladesh is an emerging developing country and has been growing at over 6% on average for the last one decade. The nation’s per capita steel consumption is well below the world average of 217 kg. Bangladesh’s current per capita finished steel consumption stands at 26 kg, which was 57 kg for India in 2012.