Steel makers seek 5 more years to repay loans

Steel makers in Bangladesh have urged the government to provide them an additional five years to help them repay their existing long-term loans through equated monthly installments.

At present, their total outstanding loans stand at around Tk 10,000 crore, all borrowed from different banks.

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"Bangladesh Bank can take the initiative to help the steel makers recover from losses incurred during the coronavirus pandemic," said Manwar Hossain, president of the Bangladesh Steel Manufacturers Association (BSMA).

He raised the demand at a press conference on "Global situation of the steel sector and our recommendation for upcoming national budget" at the Jatiya Press Club yesterday.

Hossain also demanded that they be granted two years instead of one year to repay loans taken under the government's stimulus package.

Regarding a recent hike in the price of steel in Bangladesh, he said it was for an increase in the price of scrap steel in international markets alongside a rise in shipping costs.

According to data of the BSMA, steel prices jumped 19 per cent over the past year.

Now, it is being retailed at Tk 77,500 per tonne at the mill gates, up from Tk 69,500 a year ago.

However, data of the Trading Corporation of Bangladesh shows that mild steel (MS) rod (60 grade) was sold at Tk 82,500 per tonne yesterday.

On preventing further price hikes of steel, Hossain suggested enhancing the Chattogram port's efficiency and reducing value-added tax (VAT) and customs duty on the import of scrap steel and sponge iron.

Sponge iron is used in the iron and steel industry as a substitute for scrap in induction and electric arc furnaces.

Mohammed Shahidullah, secretary-general of the BSMA, said the government should reduce VAT on steel billet alongside MS products to Tk 250 per tonne, which is Tk 1,000 at present.

He also sought reducing VAT on billet manufactured from meltable scrap and MS products manufactured from billet to Tk 500 per tonne, which is currently Tk 2,000.

He further suggested reducing customs duty on the import of scrap steel to Tk 500 per tonne, which is Tk 1,500 at present.

"If the government adopts the proposals, the price of steel will remain reasonable for consumers."

The steel industry in Bangladesh makes sales worth Tk 55,000 crore annually.

There are about 40 active manufacturers with a combined capacity to produce nine million tonnes of steel a year. Of them, Abul Khair Steel, GPH Steel, BSRM and KSRM meet more than half of the annual demand of eight million tonnes.