Steel industry thriving on economic dev, mega projects

Owing to the growing demand for local steel, the local steel industry is getting bigger while many foreign investors are showing interest to invest in the steel sector in Bangladesh.

Sector insiders think the contribution of the steel sector to the national economy and job creation will continue to increase in coming days.It is possible to take this sector into an even bigger height if any new tax burden is not imposed and uninterrupted gas and electricity supply is ensured, they added.

Currently, the country’s per capita steel consumption is 45 kg, up from 25 kg in 2012 and is forecasted to reach 73 kg by 2022.

According to leading manufacturers, more than 4 million tonnes of steel was produced in 2016 representing a market value of $3.57 billion, which is estimated to double by 2022. Bangladesh is one of the few countries in the world vastly outperforming global steel industry growth.

According to market data, major industry players are also injecting fresh investment in this sector to enhance their production capacity to grab the potential of a huge demand for the implementation of the government’s gigantic infrastructure development plans.

There are around 400 steel mills in Bangladesh with a total production capacity of around 8 million tonnes. According to a report by EBL Securities, Abul Khair, BSRM, and KSRM account for more than 90 per cent of total capacity in manufacturing billet, and more than 50 per cent of the country’s annual demand.

But due to the Corona epidemic, the factories have been closed for a long time and huge losses have been incurred in this sector. As a result, it has become difficult for them to keep the business going and pay the workers. Currently, around three lakh people are directly and indirectly involved in this industry.Seeking policy support from the government, sector entrepreneurs said government’s policy support is needed to overcome the crisis. Although the price of raw material in the international market has increased by 50-55 per cent, the price of steel in the country has decreased by 15 per cent in the last six-seven months, they added.

Bangladesh Steel Manufacturers Association (BSMA) president Monwar Hossain said local manufacturers produce world-class steel products and the capacity has increased manifold during the last one decade.

Terming the steel sector as one of the major tools for the country’s development, he said the sector will overcome the corona jolt through rapid implementation of the government’s mega infrastructure projects.

Echoing the same, president of Bangladesh Steel Mill Owners Association Sheikh Fazlur Rahman urged the government to ensure availability of funds from its stimulus package for steel sector entrepreneurs.

Entrepreneurs said the sector is expected to grow further driven by the increasing purchasing power and ongoing infrastructural developments by both public and private sector in the country.

Along with mega public-sector projects, increased demand from household and real-estate sector both in rural and urban areas will require a large volume of steel and will ultimately result in higher per capita consumption as well.

The government is investing tens of billions of dollars on mega projects including Padma Bridge, Rooppur Nuclear Power Plant, Metro Rail and numerous infrastructural and transportation development projects.

Owing to the expectation of the undertaking of more mega projects in the near future and overall healthy economic growth, there is ample opportunity for steel consumption to grow, experts said.