[🇧🇩] Steel Industry in Bangladesh

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Steel industry in Bangladesh

The steel industry is an established and growing industry in Bangladesh. Predominantly based in the port city of Chittagong, the industry has emerged as a major contributor to the national economy. According to the experts, the growth of steel industry in Bangladesh is mainly induced by the rapid expansion of the country's shipbuilding and real estate sector, as well as the major investments in various infrastructure projects throughout the country.

History

The first ever steel mill was established in 1952 by the H Akberali Group of Industries as the "Bangladesh Steel Re-rolling Mills (BSRM)". Located at Nasirabad, Chittagong, the plant formed re-enforcing bars and structural sections. The mill gradually prolonged, adopting new technological know-how by setting up a cross-nation European mill in 1987 which incorporated a wire-rod mill. The BSRM group added a captive billet manufacturing plants in 1996 so as to make sure a stable distribution of billets of its plants. In 2006, the company installed pilot cold rolling mill to make ribbed high strength wires.

By this time, KSRM Steel Plant Ltd emerged. Very recently, they have established Billet Plant at Chittagong. Their factory situated at Ghoramara, Sitakunda at Chittagong. KSRM is a steel manufacturing organization belonging to Kabir Group of Industries. One of the largest rolling mills in Bangladesh. Moreover, several other steel companies emerged in the country, most notably GPH Ispat, RRM (The Rani Re-rolling Mills LTD, Kabir Steel Re-rolling Mills, AKS, Anwar ISpat, HKG Steel Mills Ltd., Rahim Steel Mills LTD, Seema Steel Re-rolling Mills LTD, Bashundhara Steels etc.

Market

German plant maker SMS Group has announced that it has signed a contract with Bangladesh based Bashundhara Multi Steel Industries Limited to build an plant in Bangladesh.

 

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Clear policy needed to boost investment

Alihussain AkberaliMore support from various government departments and publication of a major policy document by the government is urgently required to attract investors, said Alihussain Akberali, chairman of BSRM, one of the biggest industrial groups of the country. The government needs to lay...

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Clear policy needed to boost investment

BSRM Chairman Alihussain Akberali speaks about his existing business and future plans

More support from various government departments and publication of a major policy document by the government is urgently required to attract investors, said Alihussain Akberali, chairman of BSRM, one of the biggest industrial groups of the country.

The government needs to lay the future pricing policy on market-based prices of all inputs to power projects, he said in an interview.

“We gave the Board of Investment (BoI), some nine months back, four to five proposals about the problems we were facing in setting up the largest steel plant and a power project. No one from the BoI has so far called us to hear our problems nor were our applications sent to relevant departments."

"How can there be industrialisation under such circumstances?†he questioned.

The major chunk of foreign investment is in the export processing zones (EPZs) where labour intensive industries are being set up and which offer a platter of gas, power and tax incentives.

But no importance is being given to import substitution industries, he said.

“We need active support from different ministries of land, water, power, roads and highways, home and energy to help us smoothly set up the two major Tk 3,000 crore projects which will generate employment for about 1,500."

"Today pillar to post, we are just groping in the dark. Of course we are used to it but at what cost to the country?"

It will be impossible for foreign companies to come to the country to set up heavy industries outside the EPZs, Akberali said.

Talking about his own group, the BSRM chairman said there were only 300 employees to start with and today the group boasts to have a workforce exceeding 1,700 which would grow by another 750 by the next year and a half.

BSRM made a modest beginning in the early 1950s under the aegis of his father Akberali Africawala, when the first steel re-rolling mill was set up in the then East Pakistan.

Akberali also said the last accounting year showed a group turnover of more than Tk 6,000 crore with a net profit of around Tk 150 crore.

He said the BSRM's growth and success in being able to supply quality steel to the market have been the result of constant upgradation of their business and using innovative technology.

He also said BSRM's main aim in doing business have been its integrity and honesty. They are a highly ethical group and are the largest taxpayers and the largest power and gas consumers in the country in the steel sector.

This alone is the reason for success of BSRM, he added.

“Our customers trust us for quality, correct dimensions of materials, correct weight delivered and timely delivery with adequate and rewarding credit facility to those who meet our business criteria.â€

Akberali said BSRM makes its products strictly in accordance with international and Bangladeshi standards and its mechanical properties including elongation not only meet the standards but are also way above the normal standard values.

This is possible because BSRM has invested in the most sophisticated quenching and tempering heat treatment and control equipment from a renowned European manufacturer, he said.

This technology ensures ductility along with high strengthened ductile bars which are safer.

This is the main reason why developers, consumers and various large projects trust BSRM and place orders with them, Akberali said.
On their expansion plan, the chairman said they are in the midst of setting up the largest billet making plant in the country at Mirsarai, with the production in the plant expected to commence in mid-2013.

The project cost is around Tk 1,300 crore and is being financed by a consortium of bankers from home and abroad.

The plant will have a production capacity of one million tonnes a year.

“We are expanding the capacity of our Nasirabad rolling mills to 450,000 tonnes per annum and are planning to set up a 150MW coal-based merchant power project at Mirsarai.â€

Akberali said this would be the largest ever project in the private sector which would sell 10 percent power to the Power Development Board, while the rest to various private customers.

Commenting on the housing sector in general, the BSRM chairman said high cost of flat registration is one of the biggest deterrents to the development of the sector.

He thinks this makes flat ownership an illiquid investment, where the exit route is not easy. A lack of utility connections such as water, gas and electricity is another big deterrent as many developers cannot hand over finished flats.

The high cost of urban land is the biggest reason for the depressed real estate market as it is impossible for working middle-class to own a flat in the city.

Land is the single largest cost element in the price of a flat.

"If the government could build more highways and roads connecting the existing cities, real estate developers would move their operations to the city outskirts to build new houses outside the cities.â€

He suggests the government give its khas land whereby real estate developers could be invited to build flats which could be sold in turn by the government to the lower and middle-class families on a long-term instalment basis.

About his experience on carrying out business activities in Bangladesh in general and in Chittagong in particular, Akberali said: "Doing business in Bangladesh is most easy and the policy is friendly for any investor."

The BSRM chairman also said the country is small having a homogeneous population, common culture and common language. There is no tension in running a business in the country. Chittagong is the port city, and so there is a big advantage of doing business here, he said.

 

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Steelmaker plans big

Zahirul IslamPHP Group moves to expand and diversify, as it plans to make a strong foothold in the country's steel industry. The company has recently acquired a steel mill at Ghorashal, AMK Steels Mill, to produce deformed bar. “We wanted to expand our steel industry. At present we produce...

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Steelmaker plans big

Zahirul Islam

PHP Group moves to expand and diversify, as it plans to make a strong foothold in the country's steel industry. The company has recently acquired a steel mill at Ghorashal, AMK Steels Mill, to produce deformed bar.

“We wanted to expand our steel industry. At present we produce corrugated iron sheet in our PHP Cold Rolling Mills and PHP Continuous Galvanising Mills. Now we are going to make deformed bar in the new mill,” says Zahirul Islam, managing director of PHP Ispat Ltd, a sister concern of the group.

Islam shares his views with The Daily Star on the company's latest move.

AMK Steels Mill that produces thermo mechanical treatment deformed bar was established in 2005. “The company was facing some problems, and those were hard for the company to avoid. So we acquired it for a renovation,” says Islam.

The net asset value of AMK Steels is around Tk 75 crore and the total asset value of the two mills is Tk 1,000 crore.

AMK Steels has been renamed PHP Ispat after acquisition.

PHP Cold Rolling Mills is the first of such mill in the country that started operations in 1999 and PHP Continuous Galvanising Mills started operations in 2001.

These two mills produce nearly 15,000 tonnes of corrugated iron sheet a month, meeting around 40 percent demand of the country. “Our annual turnover from the mills is Tk 2,000 crore.”

PHP Arabian Horse and PHP Arabian Horse Super are the two brands of the company's tins.

The official says they expect an increase in annual turnover by Tk 500 crore with the latest acquisition.

The country needs nearly 17 lakh tonnes of thermo mechanical treatment deformed-bar and 60-grade bar a year, according to Bangladesh Re-rolling Mill Owners' Association.

“We expect to produce one lakh tonnes a year and reach the three-lakh-tonne mark in the second or third year,” Islam says. “We hope to meet about 7 percent of Bangladesh's total demand initially.”

The company exports its PHP Arabian Horse and PHP Arabian Horse Super tins to Europe and Africa. In case of deformed bar, he says the company targets to fulfil the domestic demands at first, as the country still depends on imports.

Islam says steel is one of the important sectors in Bangladesh. “The demand for rod will increase on a regular basis. We are heading to become a developed nation. So we want to produce the best quality rods and fulfil the country's entire demand.”

“If we take initiatives to make best quality products then our competitors will also do so,” Islam says. “This healthy competition will let our people buy quality rods at competitive price.”

 

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A documentary on Steel Industry in Bangladesh.

 

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Steel sector’s operational cost rises 65% in a year

Dollar crisis, rise in utility bills taking toll, says Bangladesh Steel Manufacturers Association

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Steel sector’s operational cost rises 65% in a year​

Dollar crisis, rise in utility bills taking toll, says Bangladesh Steel Manufacturers Association

The country's steel sector experienced a 65 percent jump in operational cost in the last one year due to the appreciation of the US dollar and a rise in utility bills, said Mohammad Jahangir Alam, president of Bangladesh Steel Manufacturers Association (BSMA).

The US dollar's appreciation caused the 40 percent rise in the operational cost and utility bill hikes attributed to the rest 25 percent spending jump, he said today.​

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Alam shared the information at a press conference on "Serious crisis of steel sector due to price increase of dollar, power and energy".

The BSMA, which represents some 41 large steel producers, organised the event at the Economic Reporters' Forum in Dhaka.

The loans given to the steel sector may turn sour as the rising operational cost is weakening the financial capacity of the sector's investors, Alam said.

Banks are also failing to open letters of credit (LCs) as per the requirement for importing steel raw materials because of the shortage of the American greenback, he said.

The amount of raw materials currently being imported is insufficient to meet the sectoral demand, which is disrupting the whole supply chain of the steel sector, he said.
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Steel prices set to rise in Bangladesh: analysts

The US dollar rate hikes will fuel steel raw material cost, they said at Bangladesh International Trade Summit

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Steel prices set to rise in Bangladesh: analysts
The US dollar rate hikes will fuel steel raw material cost, they said at Bangladesh International Trade Summit

Globally steel raw material prices are stable now, but Bangladesh will have to spend higher for its import because of the US dollar rate hike since the introduction of the crawling peg system, analysts said today.

"Despite the stable international rates, the import cost of scrap steel will increase in Bangladesh as US dollar prices have increased substantially in the country," said Abhijeet Mahanta, marketing and sales director for South Asia at Atlas Commodities in India.

He spoke at a session of the fourth Bangladesh International Trade Summit 2024 at Pan Pacific Sonargaon in Dhaka. Bigmint, a platform for price reporting, market intelligence and consulting for commodities of India, organised the summit.

Bangladesh's steel sector annually needs six million tonnes of scrap steel, where imports meet 90 percent of the demand and the rest come from the local market, the industry insiders said.

Import of finished steel is prohibited in Bangladesh so the local millers need to collect scrap steel from local and foreign sources, said Sanjoy Kumar Ghosh, head of supply chain management at BSRM Bangladesh.

The steel sector has great potential in Bangladesh, as the country needs huge infrastructure development which will require a continuous flow of steel, he said.

Steel demand is low at present in Bangladesh due to the ongoing economic vulnerability, but, Ghosh believes, the situation will improve in the next one year.

The steel millers suffered supply chain disruptions in the last few years because of the Russia-Ukraine war, he said.

"The use of scrap steel is increasing in the USA and India, for which we are now looking for new sources in Australia, Malaysia and West Africa to meet our demand for steel raw materials."

The growing demand has also created a supply shortage of scrap steel, said Salehin Musfique Sadaf, director of GPH Ispat Bangladesh.

India annually imports 70 million tonnes of scraps to meet its national demand of around 90 million tonnes, said Ranjit Kumar, head of sponge iron trading at Tata International of India.

The global prices of scrap steel may increase in the days to come, but Bangladesh would not face any scarcity of such raw materials thanks to its geographical location, he said.

Zain Nathani, managing director of Nathani Group of Companies in India, moderated the session of the two-day summit, which will end tomorrow.

About 450 delegates, including industry leaders, policymakers, traders, and investors, from 35 countries, including Bangladesh, Germany, Australia, Turkey, India, Austria, Russia, Taiwan, China, Japan and America, took part in the summit.

Mill owners along with mill machine manufacturers, industrial consultants, materials suppliers and industrial group engineers also participated in this conference.​

 

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SS Steel sees profit shrivel as it expands footprint

SS Steel Ltd has registered higher turnover thanks to increased sales ever since the steelmaker started acquiring several companies in 2020, but its overall profit has dropped.

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SS Steel sees profit shrivel as it expands footprint

SS Steel Ltd has registered higher turnover thanks to increased sales ever since the steelmaker started acquiring several companies in 2020, but its overall profit has dropped.

Sales of SS Steel rose 41 percent year-on-year to Tk 1,642 crore during the July-March period of the current fiscal year. Still though, the company notched a profit of just Tk 3.9 crore, indicating that its net profit margin was 0.23 percent, the lowest among all listed steelmakers in operation.

The profit margin of S Alam Cold Rolled Steels stood at 0.64 percent in July-March while that of GPH Ispat was 1.45 percent, BSRM Steels was 4.37 percent, and BSRM Ltd was 5.20 percent.

A company's profit margin gauges the percentage of its revenue that remains as profit after subtracting all expenses, such as raw material and transport costs.

As per company disclosures, SS Steel has acquired Saleh Steel Industries, Al-Falah Steel, Super Steel, and Peninsula Steel Mills over the past five years, investing large sums to revive production at the units.

As a result, sales of SS Steel rose but its profitability has been falling in line with other financial indicators mainly due to higher net finance and raw material costs.

The net finance costs, or interest due on loans, amounted to 5 percent of turnover in FY2020-21 while it rose to 8 percent in FY23.

Therefore, investors and stock market analysts have started questioning the logic behind SS Steel taking over the companies since it remains unclear who actually benefited from the move as general investors did not.

During its trading debut in 2019, SS Steel had the highest net profit margin among all listed steelmakers. This helped the company raise Tk 25 crore through its initial public offering. Currently, it has the lowest profit margin in the steel industry, according to an official of an asset management company.

Citing how there should be a logical explanation for SS Steel's shrivelled profits, the official suggested the stock market regulator should investigate whether its profit margin reduced for business reasons.

The asset manager also said that some companies show better performances before getting listed in a bid to attract investments. But following its trading debut, the company's performance weakens. Therefore, the regulator should also investigate if SS Steel is this type of case, he said.

The profit margin of SS Steel was 12.51 percent in FY19 while it was 12 percent and 14 percent in FY20 and FY21, respectively.

The profit margin of GPH Ispat was 6 percent, 3 percent and 5 percent, respectively, over the same three years. Meanwhile, the profit margins of BSRM Ltd and BSRM Steels ranged from 1.92 percent to 8 percent during the three-year period.

The official added that the Bangladesh Securities and Exchange Commission (BSEC) should look into the reasons behind SS Steel's present situation as it could be linked with the interests of investors.

In line with the reduced profit margin, the dividend payments also decreased over the years: SS Steel declared a 15 percent stock dividend for FY19 while it was 10 percent the following years to FY22. It announced a 2 percent cash dividend for the last financial year.

In 2020, the listed steelmaker bought Saleh Steel Industries for Tk 25 crore and invested another Tk 134 crore to ensure the company's smooth operation.

SS Steel acquired Al-Falah Steel in 2022 and has so far invested around Tk 184.14 crore in the company.

A year later, the company took over the fixed assets of both Super Steel Ltd and Peninsula Steel Mills by investing around Tk 130 crore as a part of its business expansion.

The fund was given from the company's retained earnings and by taking bank loans, as per its disclosures on the Dhaka Stock Exchange (DSE). As a result, the company's debt to equity ratio increased.

In FY19, the debt to equity was 0.48 while it rose to 1.24 in FY22, according to the annual reports of SS Steel.

The ratio indicates how much debt a company is using to finance its assets relative to the value of its shareholders' equity. A high debt to equity ratio generally means the company is aggressive in financing its growth with loans.

The manufacturer's finance costs are also rising.

The net finance cost was Tk 26 crore in FY20 while it soared to Tk 121 crore in FY23. In the first nine months of the current fiscal year, the net finance cost was over Tk 100 crore.

Last month, SS Steel got approval from the BSEC to issue bonds worth Tk 500 crore in order to repay bank loans, and expand and modernise the existing projects. But higher costs ultimately hit the bottom line.

Before acquiring these companies, SS Steel posted a profit of Tk 43 crore in FY20. It rose to Tk 70 crore the following year but started falling after that.

SS Steel saw profits of Tk 61 crore and Tk 1.76 crore in FY22 and FY23, respectively.

In its financial reports, the company blamed higher raw material and utility costs alongside the depreciation of the local currency for its reduced profit in FY23.

On April 28, The Daily Star sent an email to the company secretary of SS Steel seeking comments about its performance. However, he did not respond as of yesterday.

BSEC Spokesperson Mohammad Rezaul Karim said SS Steel did not need the regulator's approval to go for the acquisitions and had submitted all the required paperwork.

"We are examining the papers and prepared some queries on some issues. If the company can't give proper answers, we will take action."​

 

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'Steel industry now a risky place for fresh investments'

Chowdhury also said it is really difficult to predict when the demand for steel will rise once again as no one knows when the ongoing economic crisis will let up.

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'Steel industry now a risky place for fresh investments'

Sumon Chowdhury, secretary general of the Bangladesh Steel Manufacturers Association (BSMA)

It has become extremely risky to invest in the steel industry of Bangladesh as the country is suffering from economic vulnerability amid sustained inflationary pressure.

Besides, the combined production capacity of local steelmakers already exceeds domestic consumption by around 41 percent, indicating an oversaturated market.

The steel industry's overall production capacity was about 1.10 crore tonnes last year against demand for 65 lakh tonnes, according to Sumon Chowdhury, secretary general of the Bangladesh Steel Manufacturers Association (BSMA).

Still, the country's annual steel manufacturing capacity will likely to increase by another 20 lakh tonnes within the next year as small producers are expanding their capacity.

There are around 120 steelmakers in Bangladesh, with some 40 large companies dominating more than 90 percent of the market, Chowdhury said in a recent interview with The Daily Star.

Referring to the BSMA's latest market assessment, he said steel consumption amounted to about 75 lakh tonnes in 2019 but reduced last year as the implementation of development projects slowed in the face of reduced public spending.

But other than cost cutting to replenish the state coffer, steel consumption in the public sector has decreased to 45 percent from 60 percent of the demand as various mega projects requiring large amounts of the material are nearly complete.

Chowdhury also said it is really difficult to predict when the demand for steel will rise once again as no one knows when the ongoing economic crisis will let up.

"The demand for steel will not increase unless the economy becomes more stable," he added.

Chowdhury pointed out that aside from lower demand, the steel industry is facing difficulties because of the gas crisis and higher foreign exchange rate while sustained inflationary pressure has reduced the purchasing power of individual consumers.

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Steel sector for easing of tariff rules in raw material import

Businesspeople and entrepreneurs on Saturday urged the interim government chief Muhammad Yunus to take necessary steps for simplification of the product tariff process and...

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Steel sector for easing of tariff rules in raw material import
United News of Bangladesh . Dhaka 17 August, 2024, 22:06

Businesspeople and entrepreneurs on Saturday urged the interim government chief Muhammad Yunus to take necessary steps for simplification of the product tariff process and increasing port capacity in importing raw materials and capital machinery for the iron and steel industry.

This call was made in the standing committee meeting of the Federation of Bangladesh Chamber of Commerce and Industry on iron, carbon steel, stainless steel, and re-rolling industry, held at FBCCI’s Motijheel office on Saturday.

Chairman of the standing committee and managing director of Shahriar Steel Mills Limited SK Masudul Alam Masud presided over the meeting.

FBCCI director Md Amir Hossain Noorani was present as the director-in-charge of the committee.

On this occasion, the business leaders stressed urgent action to ensure quality and uninterrupted supply of gas and electricity to all types of industries including the iron and steel industry.

FBCCI president Mahbubul Alam attended the programme virtually as the chief guest.

The iron and steel industry plays a very important role in the infrastructure development of the country, he said.

The FBCCI president urged the businesspeople to unite to eliminate the existing crisis in this industry.

He said, that not only in the steel industry but in all sectors, the tariff process of imported goods is a big challenge.

‘We have been hearing for a long time that the assessment value of imported goods at the port is much higher than the invoice value. We have to work in this field,’ he pointed out.

The FBCCI president also expressed optimism that the current NBR chairman would be sincere in facilitating business in the country.​

 

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Steelmakers face capital shortage as sales nosedive

Steelmakers in Bangladesh are facing a severe working capital shortage due to the sharp rise in the US dollar exchange rate and a slowdown in sales, according to industry insiders.

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Steelmakers face capital shortage as sales nosedive

Steelmakers in Bangladesh are facing a severe working capital shortage due to the sharp rise in the US dollar exchange rate and a slowdown in sales, according to industry insiders.

"The ongoing economic downturn, inflationary pressure, high interest on bank loans, and increased gas and electricity costs have put steelmakers at financial risk," said Sumon Chowdhury, secretary general of the Bangladesh Steel Manufacturing Association (BSMA).

Now, most steelmakers are facing difficulty in paying their staff salaries and bank loan instalments, said the secretary general of the association that represents more than 40 major steel producers in Bangladesh.

BSMA data shows that about Tk 75,000 crore has been invested in the local steel industry, which employs roughly 10 lakh people both directly and indirectly.

Chowdhury said that of the total investment, around 65 percent came from bank finance. But now, the investors are struggling to pay their loan instalments due to poor revenue generation.

As such, the steel industry may not survive if the situation prolongs, he added.

Chowdhury explained that steelmakers are now facing a significant working capital shortage as the US dollar price has increased to between Tk 122 and Tk 125 from Tk 85 over the past two years.

He said this unexpected surge raised concerns about the stability and future of the steel industry.

Earlier, on October 16, the BSMA wrote a letter to the Bangladesh Bank, requesting necessary measures to support the steel industry.

In the letter, BSMA President Mohammad Jahangir Alam urged for forming a special fund for providing cheap loans with a 2-year grace period to steelmakers that incurred losses for the appreciation of the US dollar.

He urged the central bank to increase the customer credit limit for commercial lenders to 30 percent from the existing 15 percent and provide additional working capital loans at low interest.

Alam, also chairman of GPH Group, said while import prices are rising in the global market, local prices are not being adjusted accordingly. As a result, many businesses are unintentionally becoming loan defaulters.

Furthermore, the BSMA asked the central bank to grant a repayment period of 16 years for rescheduled and overdue loans.

"In these cases, down payments should be set at 1 percent regardless of the loan amount considering the industry's present condition," the BSMA said.

According to the Trading Corporation of Bangladesh (TCB), the price of 60-grade mild steel came down to Tk 92,500 per tonne from Tk 93,000 on Monday.

Amid nationwide protests, curfews, a political changeover and ensuing uncertainty, the past three months have been brutal for the steel sector, with top suppliers like Bangladesh Steel Re-Rolling Mills (BSRM) and Anwar Ispat warning of increasingly bleak conditions.

As mills faced losses on every tonne of steel they made, many are lately opting to shut down their furnaces, according to the industry people.

And in view of the current economic crisis and challenging conditions, industry people are calling for the suspension of Group CIB report requirements for at least two years to protect business interests.

The BSMA believes that such a suspension would bring positive changes to the country's economic growth and investment environment.

"If one unit within an industry faces difficulties, it should not result in negative classification for all units in that group," the BSMA said.

On condition of anonymity, an official of a steelmaker said two letters of credit were blocked back-to-back as a director of his company defaulted on a personal loan, putting nearly 2,000 employees' jobs at risk.

As per BSMA data, there are 190 steel plants in the country, with around 40 being advanced facilities.

Tapan Sengupta, deputy managing director of Bangladesh Steel Re-Rolling Mills, said steel mills are currently incurring losses for producing each tonne of rod. In this situation, some small manufacturers are completely shutting down their furnaces.

This is because mill owners are selling their products for less than their production cost just to cover workers' salaries and utility bills, he added.

Sengupta also said new construction projects in semi-urban and rural areas have stalled as representatives of local government offices left during the political changeover, leaving official approvals in limbo.

"We do not know if the situation will improve," he added.

Public construction and government mega projects, which account for about 67 percent of the local steel demand, have been declining since July and came to a complete halt following the political changeover on August 5.

Additionally, high inflation has weakened the real estate sector, further impacting the demand for steel, the BSMA said.​

 

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Steelmakers call for speeding up infrastructure projects

Steelmakers in Bangladesh have placed a five-point demand to the interim government, which includes accelerating infrastructure development projects, to address ongoing challenges in the industry..“The government needs to intensify its development efforts to resolve the economic crisis tha

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Steelmakers call for speeding up infrastructure projects

Steelmakers in Bangladesh have placed a five-point demand to the interim government, which includes accelerating infrastructure development projects, to address ongoing challenges in the industry.

"The government needs to intensify its development efforts to resolve the economic crisis that is affecting all businesses," said Sumon Chowdhury, secretary general of the Bangladesh Steel Manufacturers Association (BSMA).

He made this comment at a press briefing jointly organised by the BSMA, Bangladesh Re-Rolling Mills Association (BRMS) and Bangladesh Steel Mill Owners Association (BSMOA) at the Economic Reporters Forum office in Purana Paltan yesterday.

Chowdhury also urged for increasing the single borrower exposure limit to 30 percent from the existing 15 percent to reduce the capital crunch among investors.

Furthermore, steelmakers demanded uninterrupted gas and power supply on a priority basis for their factories.

Calling for the cancellation of a notification regarding a hike in the certification mark (CM) licence fee of the Bangladesh Standards and Testing Institution, they said the charge should not be based on their turnover.

The industries ministry recently increased the annual CM licence fee to Tk 35 lakh from Tk 15 lakh in what could be a fatal move for local steelmakers, Chowdhury said.

Lastly, duty-free imports of steel products must stop, he added.

Chowdhury informed that steelmakers are facing an increasing shortage of working capital due to the appreciation of the US dollar. And while this has led to a rise in bank borrowing, they are struggling to repay the loans due to higher interest rates at present.

Md Shahidullah, managing director of Metrocem Ispat, said they are selling steel products for far less than the production cost to pay for overhead expenses.

"The steel industry is facing an existential crisis," he added while informing that steel sales decreased by about 40 percent over the past four months.

Md Shajahan, secretary general of the BSMOA, said hundreds of businesses in housing, cement, brickmaking and other industries are directly related to the steel sector.

As such, these businesses are also suffering due to the stagnation in steelmaking, he added.

Md Mahbubur Rashid Jewel, general secretary of the BRMA, said steel production costs are increasing due to the higher fuel oil, gas and electricity prices.

Moreover, the non-availability of gas and electricity are disrupting production and increasing costs, he added.​

 

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No respite for steelmakers as sales depressed since July

The price of mild steel (MS) rods has continued to fall due to low demand for construction materials, especially as public consumption has declined to virtually zero since the political changeover on August 5.

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No respite for steelmakers as sales depressed since July

The price of mild steel (MS) rods has continued to fall due to low demand for construction materials, especially as public consumption has declined to virtually zero since the political changeover on August 5.

According to the Trading Corporation of Bangladesh (TCB), the price of 60-grade MS rods stood at Tk 85,000 per tonne yesterday, down 7 percent from Tk 93,000 a month ago.

The vital construction material was priced at Tk 99,500 per tonne in September.

Year-on-year, its price has fallen 12 percent, according to the TCB.

Steel consumption in Bangladesh had been falling over the last year or so, in spite of initial expectations of a substantial rise due to growing infrastructure development projects and individual consumption.

The expectations were fuelled by the fact that the government accounted for around 67 percent of the local demand for steel, which stands at 7.5 million tonnes annually.

The steel sector is the second-largest industrial sector in Bangladesh in terms of market size and investment.

There are around 200 manufacturers, including 40 large-scale ones, with a total production capacity of around 11 million tonnes.

However, this government source of sales has gone completely dry as public construction projects have been at a standstill since the Awami League government was ousted by a mass uprising.

Amid uncertainty and protests in July and August, most contractors fled, leading to projects being put on hold. As such, the government's demand for steel has decreased to nearly zero over the past three and a half months.

In light of this, many mills have chosen to shutter furnaces as they were losing money on each tonne of steel produced.

"In order to pay employee salaries and dues, including utility bills and loan installments, millers are now selling products below production costs," said Tapan Sengupta, deputy managing director of Bangladesh Steel Re-Rolling Mills (BSRM).

Steel producers have lowered prices by almost Tk 7,500 to Tk 8,000 per tonne since December 1 in an attempt to clear inventory and meet operating expenses.

"Since demand is lower than before, we must sell our inventory at a loss," Sengupta added.

The demand for steel has also been impacted by the real estate industry's difficulties as a result of persistent inflation, which has hovered above nine percent since March 2023.

In addition, as many local public representatives fled during the political transition and are yet to return, the official approval processes for new individual construction projects in semi-urban and rural areas have been halted.

"If the construction sector does not pick up, the steel industry will suffer," Sengupta said.

Sumon Chowdhury, secretary general of Bangladesh Steel Manufacturers Association, said millers were selling 60-grade MS rods at Tk 78,000 to Tk 82,000 per tonne at mill gates.

"We are facing losses of Tk 4,500 to Tk 6,500 per tonne as our production costs stand at around Tk 84,500 to Tk 90,000 per tonne depending on the mill and location," he said.

He added that the interim government had not taken any firm decision about ongoing construction projects.

He also said there was a risk of many steel millers, except for the few big players in the market, becoming loan defaulters.

Chowdhury urged the government to create a development-friendly environment and urged contractors to start implementation of ongoing projects.

"If the government does not resume implementation work of ongoing projects, the steel sector will fall into further difficulties," he added.​

 

[Saif]

IFC to finance first climate-smart steel plant in country

The International Finance Corporation (IFC), a member of the World Bank Group, has partnered with Meghna Re-Rolling & Steel Mills Limited (MRSL), a sister concern of Meghna Group of Industries (MGI), to establish Bangladesh's first climate-smart steel plant. This state-of-the-art facility will pro

thefinancialexpress.com.bd

IFC to finance first climate-smart steel plant in country
FE REPORT
Published :
Dec 24, 2024 10:06
Updated :
Dec 24, 2024 10:06

The International Finance Corporation (IFC), a member of the World Bank Group, has partnered with Meghna Re-Rolling & Steel Mills Limited (MRSL), a sister concern of Meghna Group of Industries (MGI), to establish Bangladesh's first climate-smart steel plant.

This state-of-the-art facility will produce 1.5 million tonnes of steel annually - which represents around 20 per cent of Bangladesh's current annual demand - using 100 per cent recycled scrap, supporting the country's economic growth while tackling climate challenges, according to an IFC statement.

Supported by a financing package of $100 million, this transformative project is set to deliver significant economic, environmental, and social benefits, it added.

By leveraging advanced technology, it will reduce carbon emissions compared to traditional steel production, while creating over 20,000 direct and indirect jobs across the value chain, driving growth and sustainability.

"Bangladesh's steel industry is critical for building infrastructure that drives sustainable growth," said Martin Holtmann, IFC's Country Manager for Bangladesh, Bhutan and Nepal.

"This project represents a major leap forward, not only in climate-smart manufacturing but also in job creation and industrial advancement. We are excited to contribute to the transformation of Bangladesh's industrial landscape, supporting the nation's journey towards a greener, more resilient future."

It also said this project marks a major milestone for Bangladesh's steel industry, aligning with the Paris Agreement and meeting the criteria for 100 per cent climate finance under global climate tracking principles.

Additionally, IFC and MRSL are collaborating to develop a comprehensive decarbonisation roadmap, setting a new benchmark for sustainability in the country's industrial sector.

MGI Chairman and Managing Director Mostafa Kamal said, "We are thrilled to partner with IFC on this groundbreaking project that will reshape the future of Bangladesh's steel industry. This investment not only strengthens our capacity to produce high-quality, climate-smart steel but also represents a significant milestone for our country's economic and industrial growth."

The investment also aligns with the World Bank Group's vision for the green, resilient, and inclusive development (GRID), promoting climate-smart infrastructure, economic diversification, and industrial competitiveness, according to the statement.​