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Steel products get costlier as customs hikes assessment value
MOHAMMAD SUMAN
The prices of all types of steel products have gone up by Tk 5,000 to Tk 15,000 per tonne within the span of a week after the customs department increased the assessment value by a large margin, traders said.
The assessment value determines how much taxes or duties have to be paid by importers for the products brought in from the external market.
On Thursday, the Chattogram Custom House raised the assessment value from as low as 17 percent to as high as 42 percent. As a result, the duty on the products has climbed by Tk 5,000 to Tk 15,500 per tonne in monetary terms.
Customs stations across the country began applying the new rates from Sunday, officials said.
After the announcement, steel prices have gone up by Tk 5,000 to Tk 15,000 per tonne, traders said.
Traders have expressed concerns over the new assessment value, saying it is 10-15 percent higher than the actual price. Therefore, they fear that it will create instability in the steel market since the sale of products imported under reduced duties might increase in the open market.
According to the new valuation, the previous assessment of secondary quality hot-rolled steel, which is used in the areas of automobiles, electrical appliances, construction materials, and steel pipes, was $400 per tonne.
It has now been increased to $570, resulting in a tariff increase of $170, or 42 percent. This means the duty on the product will now amount to Tk 22,000 per tonne from Tk 16,000 previously.
Similarly, cold-rolled secondary quality steel -- used in the construction of beams, structures, columns, and sections, steel sheds, industrial buildings, and garages -- was previously assessed at $520 per tonne and it has now been raised to $650, an increase of 25 percent.
Thanks to the adjustments, the assessment rate has increased from 17 percent to 42 percent on other steel products such as coated steel, zinc-coated steel and stainless steel.
The new assessment rates are specifically targeted at commercial importers, while industrial imports will continue to pay duties in line with the price quoted on the website of energy information group Platts like in the past.
The new value has been determined by a committee consisting of 22 members of the Chattogram Customs. The body has relied on the information obtained from Platts and the LME (London Metal Exchange) over the past year.
Bangladesh consumes 20-22 lakh tonnes of steel products every year. Of the volume, 88 percent is imported by industrial facilities and the rest by commercial importers, data from the National Board of Revenue showed.
At present, the revenue collection from the sector stands at Tk 500 crore to Tk 600 crore. Now, the receipts will jump by Tk 100-150 crore.
Importers in Dhaka and Chattogram have reported a price increase of 5 to 12 percent for all types of steel following the implementation of the new assessment value.
Hot-rolled secondary quality steel was previously retailed at Tk 1 lakh to Tk 1.02 lakh a tonne, whereas it will cost now Tk 1.1 lakh, said Omar Faruque, the proprietor of MK Trading in Dhaka’s Keraniganj.
Likewise, the price of cold-rolled steel has increased from Tk 1.12 lakh to Tk 1.20 lakh per tonne.
Mohammad Fyzur Rahman, commissioner of the Chattogram Custom House, said the minimum assessment value has been adjusted due to the significant difference between the import price and the price declared by importers.
The pricing is based on credible sources such as Platts and LME, he said.
Abuzar Gifari Joyel, president of the Bangladesh Iron Steel Importer Association, said the new assessment price for secondary quality steel is determined using information from Platts. However, only information about the top-quality steel is available on the website.
He said the price of secondary-quality steel should be 15-20 percent lower than that of prime-quality steel.
“Unfortunately, the new assessment rate for secondary quality steel is 5 percent higher than that of the prime quality steel since the customs authorities have fixed the rate based on the average data.”
The association wrote to the commissioner, requesting him to reconsider the assessment value and align it in line with the current market price.