• Friday, October 24, 2014

Big steel companies displace small ones

Sajjadur Rahman

 Small steel millers are being squeezed out of the market as more and more giants are entering the business.

At present, three big steelmakers -- BSRM, Abul Khair Steel and KSRM -- supply more than 50 percent of the country's annual need for 35-40 lakh tonnes of steel, with BSRM and AKS set to expand their capacity further to fully control the market for iron metal.

Besides the competition from big players, the smaller mills are also facing challenges such as price fall in international market and a decline in domestic demand, which they said are forcing them out of the market.

AKS and BSRM have been expanding their capacity to a level that they can meet the country's entire demand, said SK Masudul Alam Masud, former president of the Bangladesh Auto Re-Rolling and Steel Mills Association.

Masud said the market is increasingly becoming monopolistic, with over 300 smaller millers facing a phase-out of the market.

Mizanur Rahman Babul, senior vice-chairman of Bangladesh Steel Re-rolling Mills Association, echoed Masud's concerns.

 

“We are toddling. One-fourth of our 130 factories have already been shut down for want of business,” he said.

Though Bangladesh is an emerging developing country and has been growing at over 6 percent on average for the last one decade, its per capita consumption of steel is well below the world average of 217 kg.

Bangladesh's current per capita finished steel consumption stands at 26 kg, which was 57 kg for India in 2012.

Businesses said steel industry tracks the overall economic growth in the long-term.

Also, since steel demand is derived from other sectors like construction buildings, roads, consumer durables and infrastructure, its fortune is dependent on the growth of these user industries.

They said a slump in demand in the last two years has further affected the business of the steelmakers. They said the drop in demand has reduced the price of metal by Tk 4,000-Tk 6,000 per tonne in a year.

The government has to speed up its spending on building infrastructure, which will push up the demand for steel, said Alihussain Akberali, chairman of BSRM, citing the Dhaka-Chittagong four-lane highway that has been in construction for years but is yet to be completed as a case in point.

BSRM, the largest steelmaker in the country, currently produces around 6 lakh tonnes of steel a year, with plans to scale up production capacity by 3 to 4 lakh tonnes a year, he said.

AKS's re-rolling mill is the single largest steelmaker in Bangladesh, with the capacity to produce 12 lakh tonnes of graded steel bars per year.

“We are in the process to further increase our capacity to strengthen our foothold in the steel market,” said a senior official of AKS wishing not to be named.

After BSRM and AKS, KSRM is the biggest steel miller with an ability to produce 4 lakh tonnes of iron metal a year.

Published: 12:01 am Monday, August 11, 2014

Last modified: 1:38 am Monday, August 11, 2014

TAGS: BSRM steelmakers Big steel companies Abul Khair Steel and KSRM domestic

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