Steel industry booming on mega projects
Bangladesh’s steel industry is going from strength to strength thanks to a construction boom and implementation of mega infrastructure projects, said experts and a study report.
A decade ago consumption of steel, which includes mild steel rod, prefabricated steel and corrugated iron sheet, was 1.6 million tonnes and last year it stood at about 7.5 million tonnes, according to industry players.
“The steel industry passed a stellar 2018,” said United Securities in a recent report on the sector.
Tapan Sengupta, executive director of BSRM, one of the leading steel manufacturers in Bangladesh, gave the credit to the government’s mega infrastructure projects.
Government projects account for 35 percent to 40 percent of the total steel consumed in Bangladesh, up from 15 percent a decade ago. And last year seven mega projects picked up steam, according to the report.
“Rapid urbanisation along with faster economic development is also contributing to the growth,” Sengupta said, adding that BSRM’s growth was 12 percent last year in terms of sales.
Today, steel is almost a Tk 50,000 crore industry, according to sector people.
In the past few years a good number of steel and re-rolling mills were set up that use state-of-the-art technologies and churn out world-class products, said Md Shahidullah, secretary general of Bangladesh Steel Manufacturers’ Association.
“So much that the Rooppur nuclear power plant and Padma bridge are being constructed solely with steel manufactured locally,” he said, adding that steel products are also being exported.
There are about 40 active manufacturers, who altogether have the capacity to manufacture nine million tonnes a year. Of them, Abul Khair Steel, BSRM and KSRM meet more than half the demand.
And yet the industry has plenty of room to grow more.
At present, Bangladesh’s steel consumption is significantly lower than the global average, according to the World Steel Association, the international trade body for the iron and steel industry.
Currently, the per capita consumption in Bangladesh is 45kg whereas the global average is 208kg. In India, the average is 65.2kg and in Pakistan 42kg.
Per capita steel consumption is much higher in developed countries—400 kg in South Korea, 600 kg in the USA and 1,000 kg in Japan.
It is this potential that has perhaps convinced Chinese steel giant Kunming Iron & Steel Holding Company to fork out $2.4 billion to set up a steel manufacturing plant in Bangladesh.
Meanwhile, there are some mega projects like the Rampal power plant, Kanchpur-Meghna-Gumti bridge and Karnaphuli tunnel that are being made with imported steel -- brought in duty-free to the country.
On one hand, the government is losing out on revenue, and on the other, it is giving out the signal that the local manufacturers are lagging behind their foreign counterparts, said Shahidullah, also the managing director of Metrocem Ispat.
“This is depressing, discouraging and degrading,” he added.