Steel industry to heat up as new players joining race
Bangladesh's steel industry is set to see the entry of a couple of large business houses while several existing steelworks are looking to expand their capacities in order to gain from the rising demand for the key construction material.
Six conglomerates, including Meghna Group of Companies, PHP Group of Industries, Bashundhara Group and Anwar Group of Industries, are setting up new factories and expanding manufacturing capacities.
"We are already in the business of building materials as we make cement, ceramics and fabricated buildings. We are going to produce steel to expand our portfolio," Mostafa Kamal, chairman and managing director of Meghna Group of Companies, told The Daily Star this month.
Meghna has diversified its operations and has an annual turnover of approximately $2.8 billion.
The conglomerate is investing an estimated $400 million to establish a steel plant that will have an annual production capacity of 14 lakh tonnes. It has already started work for the plant at the Cumilla Economic Zone.
Thanks to the expansion drive, Bangladesh's annual capacity to make steel is projected to exceed 1 crore tonnes.
Some 40 steelworks are active now, having a combined capacity of 90 lakh tonnes. Bangladesh currently requires 80 lakh tonnes of steel annually.
"People are switching to brick houses from tin homes as lifestyles and aspirations are changing. We also have land scarcity. We will have to go vertical to ensure homes," said Sufi Mohamed Mizanur Rahman, founder chairman of PHP Family, last month.
Having concerns in flat steel, float glass, shipbreaking and automobiles, PHP Group plans to establish a basic steel factory in the Bangabandhu Sheikh Mujib Shilpa Nagar (BSMSN), Mirsharai in the southeastern division of Chattogram. At its peak, it will produce 30 lakh tonnes of steel annually.
"If we want to increase per capita consumption to 200 kg a year, we will have to produce 10 crore tonnes of steel," said Rahman.
Bashundhara Group, one of the largest business groups in Bangladesh, is setting up two steel industries with a total investment of $500 million at the BSMSN.
Through the two mills, Bashundhara Pre-fabricated Building Manufacturing Industries and Bashundhara Multi Steel Industries, more than 2 million tonnes of hot-rolled coils will be produced annually, according to officials.
The factories will be able to go into full operation by mid-2023.
Bangladesh Steel Re-Rolling Mills (BSRM), the country's largest steel manufacturer, plans to establish a re-rolling mill that will have 7 lakh tonnes of steel-making capacity.
With this, the combined capacity of the company will reach 24 lakh tonnes, said its managing director, Aameir Alihussain, last month.
Anwar Group, which is already in the steel sector, is going to invest more than Tk 4,000 crore to build a new factory in Gajaria of Munshiganj in order to raise its market share.
The land development work for the factory has already been completed. The production capacity of the plant would be 16 lakh tonnes per annum.
"We have a target to go into commercial production by next September," said Manwar Hossain, chairman of the group.
"But we are advancing carefully considering the current economic turmoil," he said.
The group hopes to mobilise foreign financing for the project. The new factory is expected to employ 4,500 people.
At present, Anwar's factory at Tongi in Dhaka produces around 3 lakh tonnes of rods annually.
Abul Khair Steel of Abul Khair Group, GPH Ispat, BSRM, and Kabir Steel Re-Rolling Mills of Kabir Group of Industries meet more than half of the annual demand for rods in the country.
The size of the market is about Tk 72,000 crore as per the current rates.
But domestic demand continues to increase rapidly thanks to various mega projects and infrastructure development activities being implemented across Bangladesh.
Indian market analysis firm SteelMint forecasts that the demand for steel would increase by 6 per cent to 7 per cent per year in Bangladesh until 2025.
Bangladesh's steel consumption is significantly lower than the global average. Currently, per capita consumption is 45 kilogrammes whereas the global average is 208 kg.
In India, the average consumption is 65.2 kg and in Pakistan 42 kg, according to the World Steel Association, the international trade body for the iron and steel industry.
Per capita steel consumption is much higher in developed countries -- 400 kg in South Korea and 1,000 kg in Japan.