Import unlikely to bring down MS rod prices
Monday, 28 April 2008

The government move to cool down the overheated the market of MS rods and other steel products through allowing their frequent imports is unlikely to be successful due to counter-measures taken by neighbouring countries, reports UNB.

According to industry insiders, India has already imposed ban on export of MS rods and withdrawn all import duties to facilitate the import of steel products to cool down its domestic market.

Local steel millers said after the Indian government''s such move, it will be very difficult for Bangladeshi traders to import MS rods or other steel products at cheaper rates than local products. The country''s steel products'' market has been volatile for the last few months, as the prices continued to go up abnormally.

The prices of MS rods have doubled in the last six months on the domestic market for various reasons. The 40-grade MS rod is now selling at between Tk 65,000 and 66,800 per ton against Tk 40,000 six months ago, while the 60-grade MS rod is now selling at Tk 72,000 per ton against its previous rate of Tk 52,000. In the wake of the steep rise in the prices of steel products, the major elements of construction works, the government has taken a move to regulate the market.

As part of the government efforts, the Army-led Joint Forces launched drives at different steel mills and ship-scrap breaking depots, and finally fixed the prices of MS rods. But the government steps did not work.

Later, the Commerce Ministry convened a meeting of the stakeholders to discuss the issue and formed a high-powered committee to find out the reasons why the prices of steel products kept rising.

The committee is still working and kept holding meetings with different stakeholders, including ship-scarp breakers, scarp importers and steel and re-rolling millers. The Commerce Ministry meeting also took a decision to consider the opening up of import of MS rods through slashing down the existing high import duty.

But the market players are in doubt about the success of the move, as India has already imposed ban on export of MS rods. Even the Indian government has withdrawn all import duties to facilitate the import of steel products to cool down its own market.

The local steel millers said after the Indian government''s such move, it will be very difficult for Bangladeshi traders to import MS rods or other steel products at cheaper rates than local products. They said the prices of steel products have gone up due to the booming economies of the BRIC countries like Brazil, Russia, India and China.

They said Bangladeshi producers can always provide competitive rates because of cheaper gas and labour in the country. "But Indian producers don''t have these advantages," said Abul Quasem Majumder, Vice President of Steel Mill Owners'' Association.

General Secretary of Re-Rolling Mills'' Association Sheikh Masadul Alam Masud echoed the same view and said the prices of raw materials, particularly that of the melting crap, has doubled in the last six months on the international market which led to the price hike back home.

He said now they have to import melting crap at US$ 650 per ton, which was just below US$ 350 barely six months back. Similarly, he said, short supply of ship-scrap, which is also used to produce MS rods, is another major reason behind the recent price hike. He said only a limited number of traders are allowed to import ship-scrap and they have had a monopoly on the market.

"This sort of monopoly should go and ship-scrap import should be opened up for steel millers too," he said adding that this could effectively cool down the market. He also demanded steps like withdrawal of import duty as the Indian government has taken to cool its domestic market.

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