Steel industry to heat up in Bangladesh as new players join race

[Bilal9]

Jagaran Chakma, Sohel Parvez, Dwaipayan Barua

Sun Oct 30, 2022 08:00 AM Last update on: Sun Oct 30, 2022 08:40 AM

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.

 

[Abu Shaleh Rumi]

Consumer level price of construction rods has doubled compared to last year!

 

[Bilal9]

Consumer level price of construction rods has doubled compared to last year!

Bhai price of everything is going up, not just angle iron, rod and sheet steel.

But per capita steel consumption in Bangladesh (mostly crude steel) is going up at a good clip because of rip-roaring construction sector.

As the article confirmed, 6 per cent to 7 per cent growth per year in Bangladesh is assured until 2025, and I suspect which will double that rate past 2025 in another five years. Right now per capita yearly consumption is 45 kilograms and this has a lot of room to grow. And Bangladesh is just getting started with steel production expansion as the article said.

Here is the rest of the world on steel consumption - see the very last graphic in the next post

 

[Bilal9]

 

[mb444]

Very informative post, thank you.

BD is progressing fast and long may it continue.

 

[Abu Shaleh Rumi]

Bhai price of everything is going up, not just angle iron, rod and sheet steel.

Except our oligarchs nobody's income has doubled compared to last year. Lots of construction projects has stopped because of this enormous price hike. People's are afraid to invest in this volatile situation. And this has a chain reaction...

 

[BananaRepublicUK]

Except our oligarchs nobody's income has doubled compared to last year. Lots of construction projects has stopped because of this enormous price hike. People's are afraid to invest in this volatile situation. And this has a chain reaction...

Expatriates tend to stick to real estate due to the crooked nature of the Bangladesh’s equity markets.

Thus growth is guaranteed.

Sylheti money tends to stay in Sylheti

 

[Abu Shaleh Rumi]

Expatriates tend to stick to real estate due to the crooked nature of the Bangladesh’s equity markets.

Thus growth is guaranteed.

Sylheti money tends to stay in Sylheti

Im not an Expat, all of my cousins are. I manage my clans cash. Means Im tasked to make sure their money grows money and their capital is safe. Except real estate and factory nothing is safe investment in Bangladesh (in my pov).

Im not bright and hardworking enough to become an industrialist. So, my only option is real estate. I search, buy, develop and wait for the right moment...

 

[BananaRepublicUK]

Im not an Expat, all of my cousins are. I manage my clans cash. Means Im tasked to make sure their money grows money and their capital is safe. Except real estate and factory nothing is safe investment in Bangladesh (in my pov).

Im not bright and hardworking enough to become an industrialist. So, my only option is real estate. I search, buy, develop and wait for the right moment...

I wish I was lucky enough to have you as my cousin

My inheritance is managed by a crooked second cousin.

Everybody’s land produces crops except mine, apparently

I get zero returns instead I have to pay him!!!

 

[Bilal9]

Steel industry of Bangladesh have contributed immensely in the country’s overall infrastructure development by providing long steel products such as rebar, angel, beam and channel. Demand for long steel has increased sharply in recent years – currently 7.5 million MT of rebar which was merely 2.5 million MT in a decade ago. Per capita consumption of steel stands at 45kg which was only 25kg in 2012 – per capita, steel consumption is expected to be 73kg by 2022.

Despite recording rapid growth for decades, Bangladesh’s steel sector now faces a serious threat due to coronavirus pandemic which has caused almost a quarter of a million deaths across the globe. The country has also seen a surge in the number of cases and deaths since the announcement of the first case on 08 March.

The steel industry is set to lose Tk 4,000 crore as the COVID-19 outbreak has disrupted the production due to factory closures and import of raw materials which are mainly sourced from Russia, India, the USA and Canada.

A prolonged lockdown in these countries could cause serious damage to the supply chain as more than 90% of the raw materials (steel scraps) are still imported. Most of the rolling mills will be forced to shut down due to shortage of raw materials despite having the domestic shipbreaking yards which also provide melting scrap but not enough.

A thriving industry​

To fulfil the growing demand, BSRM and AKS – two of the major steel producers – have already installed efficient state-of-art induction and electric arc furnace. Other competitors such as PHP, GPH Ispat and KSRM are also expanding their production capacity to provide different types of steel products which were once imported.

Overview of long steel products – Rebar

Source: NewVision Reseach

Despite making a significant investment by the major steelmakers, local producers are capable of producing 90% of the total required billets. The country still imports billets as some manufacturers produce billets to serve their own re-rolling mills and a large number of small to medium rolling mills don’t have the billet producing capability.

Imports of billet, on the other hand, have reduced sharply in recent years. During 2013-2014, approximately 1.6 million MT of billet was imported however during the 2018-2019 fiscal year, this number has slumped to only 0.5 million MT.

At present, Bangladesh resides more than 300 – although around 100 mills are not in production at the moment – steel mills and a majority of which are manual mills however in recent years number of automatic and semi-automatic mills have increased proportionately.

Growing demand for graded products has forced local manufacturers to upgrade their production facility. In order to stay in the competition, some small mills have created joint-venture companies to shift away from manual to semi-automatic mill.

Type of Steel Re-rolling Mills in Bangladesh

Source: NewVision Reseach

Domestic competiion​

Giant steelmaker BRSM and AKS dominate the market providing almost 40% of country’s total demand whereas KSRM and GPH Ispat two other major players have 8% and 7% market share respectively. Market leader BSRM, a public listed company produces 1.5 million MT of rebar per year and privately owned AKS – a concern of Abul Khair Group – who is also the largest manufacturer of the corrugated sheet, produces around 1.38 million yearly.

GPH Ispat, another public listed company, has recently signed an agreement with Primetal Technologies Austria GmBH (a joint venture of Siemens VAI & Mitsubishi Heavy Industries and partners) to set up an integrated steel plant with the state of art and the most sophisticated production facility. Once completed its production capacity of billets will increase to 1 million MT while rebar production would increase to 760,000 MT – currently, 640,000 MT.

Yearly actual production of major players and their market share- Rebar

Source: NewVision Reseach

Steel usage in the construction sector​

A stark increase in infrastructural projects – for constructing bridges, airports, highway, metro rail, economic zones, Power-plants and so on – has driven up demand for steel significantly in recent years.

Bangladesh steel industry has experienced around 10% to 15% growth per annum leading to total demand of 7.5 million MT in the last fiscal year. The country is also one of the largest importers of Scrap, Sponge and Pig iron – understood to be 2nd largest scrap importer in South East Asia and 4th in as a whole Asia region.

Government is the biggest user of rebar consuming 60% of total demand while household users need another 25% but this number is expected to increase rapidly in the coming years. Industry insiders predict that household users would require approximately 40% of total demand in the future – a shift in which general households would be using more steel.

End users of rebar

Source: NewVision Reseach
Almost every manufacturer produces 8mm to 40mm rebar and only BSRM can produce 50mm which are mainly used for heavy construction such as bridges, flyover and so on. Local millers usually produce such rebar on the basis of a request from construction companies.

TMT 500 (grade 72.5) is the most popular products in Bangladesh – total demand is 4 million MT per year – and a significant of steel used in the country is non-graded rebar which is expected to decline in the coming years as consumers are becoming more concern about the quality of the rebar they use for the construction.

Grade-wise demand of rebar

Source: NewVision Reseach

Products of 10mm, 12mm and 16mm size have the most demand in Bangladesh accounting for 58% of total rebar used. Other most selling sizes of rebar include 20mm and 25mm which also have sizeable demand especially for constructing high rise commercial buildings and government infrastructural projects.

Size-wise demand of rebar

Source: NewVision Reseach
There is considerable uncertainty in the projections of future demand due to ongoing coronavirus crisis. The impact of recent events will reflect on future demand and the industry may not achieve 10% to 15% growth as previously expected.

The actual demand may be lower than the most probable estimate in case there is a prolonged lockdown of factories and postponement of government’s infrastructure projects due to shortage of funds while the country fights the coronavirus.

Under the best-case scenario, the current stagnant period may well be over by the end of 2020 and a boost in demand from 2021 onward would bring the steel industry back to the pre-corona situation.

Current demand and forecast of rebar

Source: NewVision Reseach

Prospects and challenges of the Bangladesh’s steel industry​

Despite the coronavirus outbreak, Bangladesh steel industry has a huge potential given the implementation of mega infrastructure projects such as Padma Bridge, Metro Rail, Rooppur Nuclear Power Plant and construction of a number of economic zones. Private sector and household users will also consume a significant quantity of steel once this global pandemic is over.

Currently, port facility in Bangladesh is inadequate and for that scrap carrying big vessels cannot enter into the Chittagong and Mongla port. However, the government has plans to develop existing ports while building new ports – proposed Mirershoriai Ocean Front Economic Zone and Payra port for instance. Once these proposed ports are built, steel manufacturers will be able to bring scrap easily which would enable them to produce products faster than now.

On the contrary, local steelmakers largely depend on international market for their raw materials needs and these companies are now exposed to shocking disruption in global trade due to COVID-19 crisis. If there is a shortage or price hike of raw materials then production cost will increase which could affect profit margin that is already soured.

At present, there is no Anti-Dumping Tariffs for the steel industry in Bangladesh. However, local manufacturers are protected by high import tariffs policy. Some of the local steelmakers have a good connection with the government and they often influence relevant officials to impose high tariffs on finished products so that imported products remain expensive.

Uncertain future ahead​

Steel industry is heavily dependent on the construction sector and this sector is set to face serious challenge due to disruption in economic and development activities which are mostly put on hold at the moment. Construction activities and implementation of infrastructure projects have already halved due to shortage of labour.

The construction sector is very labour incentive and under the current situation, workers are fearful to return to work as they operate in an environment where social distancing is very difficult.

The government has announced various stimulus packages to boost the economic activities and steelmakers of Bangladesh should also be entitled to receive such support. Most of the companies are facing extreme shortages of working capital to pay salary to their staff due to a slump in sales.

If the pandemic is not brought under control, and the government fails to coordinate policy responses, the decline could be even more. Two factors will determine the strength of the recovery. One, how quickly the pandemic is brought under control. And two, the policy choices the government of Bangladesh make to rescue its promising steel industry.

 

[Bilal9]

Steel Re-rolling Industry of Bangladesh: Growth and Future Prospects​

An important factor in determining a country’s development is the growth of its steel production and consumption. Bangladesh’s steel and re-rolling industry has played a vital role in developing the overall infrastructure of the country. In addition, for years the steel industry has been supporting other industries like transportation, energy, heavy engineering and construction by supplying necessary steel products such as reber, angles and beams. In the last few years, the country’s local steel market has grown by 15 to 20 percent, which has a current market size of BDT 45,000 crore. Besides, Bangladesh is currently producing semi finished steel – ‘billet’, as a result, steel products are being exported abroad after meeting the local demand.

Overview of Steel Re-rolling Industry​

The journey of Bangladesh’s steel industry began in 1952 with the establishment of ‘Bangladesh Steel Re-Rolling Mills’ (BSRM) at Nasirabad, Chittagong. After Independence, there were a few steel mills in the country. In 1984, KSRM, a Concern of Kabir Group of Industries, started their operations in Bangladesh with Modern Machineries, and established an Automated Rolling Mill. In the year 1993, another prominent steel manufacturing company Abul Khair Steel, started its operations in the country. Meanwhile, after 1990, as the construction work in Bangladesh continued to grow rapidly, the demand for steel also increased at the same rate, resulting in the establishment of several large steel mills in the country.

According to IDLC, there are about 400 steel mills in the country with a total production capacity of about 9 million metric tons, of which the country consumes more than 7 million metric tons of steel.

There are 400 steel mills in the country total a total production capacity of 9 million metric tons which requires 7 million metric tons of steel.
At present, Abul Khair Steel is leading the industry with a production capacity of 1.4 million metric tons, while BSRM, KSRM, GPH Steel and Anwar Steel are among others producing steel at significant rates.

Element	Company Production Capacity
AKS	14
BSRM	12.4
KSRM	8
GPH	7.6
Anwar Steel	3.6

In terms of market share, the top three steel producers – Abul Khair Steel, BSRM and KSRM – are meeting 50 per cent of the demands in the local market. At present around 1 million people are directly or indirectly employed in this sector. Based on shape, the steel industry can be divided into three categories: TMT bars, flat steel and stainless steel.

There are three categories of steel: TMT bars, flat steel, and stainless steel.

TMT bars are highly strong, and these reinforcement bars are the most popular in the construction industry due to their low erosion. As a result, only TMT bars are used in construction work in most of the developing countries around the world. However, in Bangladesh, these TMT bars are most commonly used in strong concrete structures, bridges and flyovers, dams, thermal and hydel power plants, industrial structures, and high-rise buildings. In addition, flat steels are mainly used in the automotive industries, home appliances, shipbuilding, and construction sectors. On the other hand, stainless steel is used in other sectors including general construction, kitchen accessories, and medical equipment.

There were 60 percent of steel used in Bangladesh’s public sector, 25 percent of steel used in households, and 15 percent used in commercial construction. Demand for steel in Bangladesh is growing rapidly. Even a decade ago, the demand was 1.6 million metric tons, but it reached 7 million tons in 2018, and is expected to rise to 18 million tons by 2030.

Of the total steel produced, 60% is used in the public sector, 25% is used for households, and 15% is used for commercial construction.

At present, although the steel production capacity is expected to increase, it has been severely hampered by the Corona epidemic. In an interview with The Daily Star, Monwar Hossain, president of the Bangladesh Steel Mills Owners Association, quoted, “The total loss to steelmakers due to the Corona epidemic in 2020 was 5957.61 crore taka.” Nevertheless, since the situation has slowly normalized, the steel mills have begun turning around again.

Current Trends​

Branding​

At present almost all the steel manufacturing companies are emphasizing and focusing on their branding and promotion. However, even a decade ago TVC or print promotion of any of these companies were rarely seen. It was BSRM, one of the leading companies in the steel industry, who was the first to run their promotional camps in various electronic and print media. Later on, other companies gradually started bringing forth their promotions.

Consumer Awareness​

At present while purchasing steel products customers are more aware than ever before. Earlier, consumers used to buy any rod or steel available in the market for their needs. However, now consumers are more concerned about the type of steel and the grade of rod in such product purchases. As a result, consumers are buying the right grade of products needed to build any type of infrastructure.

Export of Steel Product​

Steel is now being produced on a large scale for use in almost all types of infrastructural development in the country. At present these steels are being exported abroad after meeting the demand of the country. From 2016-17 to 2020-21, Bangladesh’s steel exports have increased at a rate of 22.73% per annum.

From 2016-17 to 2020-21, Bangladesh’s steel exports have increased at a rate of 22.73% per annum.

Capacity Increase and Foreign Investment​

In recent years, realizing the export potential of steel, the steel producing companies of Bangladesh have increased their production capacity based on the market demand. According to a 2018 quote from The Daily Star, BSRM, Anwar Steel, AKS, GPH, KSRM, and Bashundhara Steel have increased their capacity in recent years. PHP has also invested BDT 1,500 crore in a new unit in Feni and will set up a combined steel factory on 500 acres of land at a cost of BDT 31,600 crore in Mirsarai Economic Zone in the next five to seven years. To meet the growing market demand, BSRM has decided to set up a new plant at a cost of BDT 703 crore to increase the annual MS rod production capacity to 500,000 metric tonnes by 2020. The new production unit is expected to be launched by mid-2023. Meanwhile, realizing the future growth of Bangladesh’s steel industry, many foreign investors are keen to invest in this sector. Chinese steel giant Kunming Iron and Steel Holding Company (KISC) has signed two MoUs with the Bangladesh Economic Zone Authority (BEZA) to invest BDT 19,818 crore in Mirsarai’s steel production project in 2018. Such foreign investment could be a major factor in the future growth of Bangladesh’s steel industry.

To meet the growing demand, BSRM has set up a plant at a cost of BDT 703 crore to increase the annual MS rod production.

Growth Factors​

Integration with Megaprojects​

According to a source in The Daily Star, with the passing of the bill of Padma Bridge by ‘ECNEC’ in 2007, the implementation of mega projects in the country began in 2014. The present government has undertaken hundreds of projects to transform Bangladesh into a developing country by 2041 and to implement the Delta Plan of 2100. In addition, with a total of 100 economic zones across the country, the country’s infrastructure development has created huge demand for steel in ongoing mega projects in several sectors including communications, energy, trade and housing.

According to the Secretary General of Bangladesh Steel Manufacturers’ Association, demand for steel in mega projects like Padma Bridge and Rooppur Nuclear Power Plant is being met entirely from locally produced steel, and steel is being exported at the same time. Besides, the sector is being further expanded only to meet the domestic demand. According to Manwar Hossain, MD of Anwar Group of Industries, the growth of steel industry in Bangladesh will continue for the next 20 to 25 years.

Increase in Purchasing Power​

Along with the growing GDP of Bangladesh, the purchasing power of the common citizens are increasing. As a result, people are building more housing than ever before, with plenty of steel and rods being used. According to tbs news, the per capita steel-rod consumption in 2012 was 25 kg, which increased to 45 kg in January 2020 , and is expected to reach 75 kg by 2022. Steel rolling mills have also expanded their business to meet this rising demand.

Steel-rod consumption in 2012 was 25 kg, which increased to 45 kg in 2020, and is expected to reach 75 kg by 2022.

Challenges​

Inadequate Raw Materials​

Raw materials used in steel production in Bangladesh still have to be imported. The players in the shipbreaking industry currently operating in the country are not yet able to supply sufficient quantities of raw materials required by the steel industry. As a result, importing these essential raw materials is a very useful and time consuming task which is quite challenging. According to The Daily Star, about 100 steel re-rolling mills in the country were shut down in 2006 and 2007 due to shortages and high prices of raw materials. As a result, thousands of people working in the sector have lost their jobs.

About 100 steel re-rolling mills were shut down in 2006 and 2007 due to shortages and high prices of raw materials.

Inefficient Estimations of Projects​

If a mega project runs smoothly according to the proposed timeline, then the steel mills benefit due to working capital projection and fair consumption of the product. However, it is often observed that a project does not run according to the proposed timeline and project work is delayed, which ultimately affects the projected production and profitability of steel mills.

Changes in Policies and Regulations​

Various policies of the Government of Bangladesh often undergo unexpected changes in terms of Customs Law, Income Tax, Value Added Tax, and other regulatory bodies. In addition, setting up a steel re-rolling factory is highly capital dependent, so in most cases, a bank loan is required to set up a new factory. But due to interest rate fluctuations, the companies taking loans face various difficulties like “interest rate risk”. The volatility of such policies, and the fact that steel producers are directly involved in these policies, has a negative impact on the growth of the industry.

In most cases, a bank loan is required to set up a new steel re-rolling factory in the country.

Opportunities​

Discovery of Iron Ore Reserve in Dinajpur​

As there is no source of iron ore in Bangladesh, almost all the scrap steel required for steel production has to be imported. However, the search for a new iron ore source in Dinajpur is opening up new possibilities that could supply iron ore for the next 30 years. This will save a huge cost of scrap steel import in Bangladesh and will also allow steel mills to grow more.

The Upcoming Development of Port Facilities​

Due to inadequate port facilities in Bangladesh, large scrap ships are unable to enter Chittagong and Mongla ports. However, the Bangladesh government has confirmed that they will build new ports such as ‘Mirsarai Ocean-Front Economic Zone’ and ‘Payra Sea Port’, as well as renovate existing ports. Once these proposed ports are complete, steel manufacturers will be able to import scrap more easily. Which will speed up their production.

Suggestions​

To develop the steel industry of Bangladesh, it is necessary to increase domestic production and the purchase of capital goods. Moreover, there is a significant shortage of R&D in the steel sector of Bangladesh, which, if addressed, is likely to further increase the growth. It is also possible to increase the overall steel productivity of the country, by utilizing the development of efficient labor. In addition, ensuring the safety and welfare of the steel industry’s labor force is equally important.

------------------------------------------------------------------------------------------------------------------------

Old news but still informative from SteelMint India.

Bangladesh to Add 1.5 MnT Steel Capacities in 2020​

Bangladesh’s steel industry is growing at a rapid pace on the back of increasing steel demand for the mega infrastructure projects lined up in the country in this decade. To meet the expeditious growth in demand, many large and medium steelmakers are expanding their steelmaking capacities by installing new melting furnaces. Approximately, over 10 induction furnaces of an (avg 25 T) capacities will get commissioned and operational in 2020 itself.

Major steel mills in Chittagong include – BSRM, Abul Khair, GPH Ispat & KSRM. In Dhaka mills like Rahim Steel, Salam Steel etc expanding their melting capacities aggressively, while even smaller mills like RB Steel, HR Steel and many others are adding new furnaces.

Bangladesh is expected to add around 1.5 MnT of steel production capacities in the next 12 months, thus leading to a sharp growth in its raw material import demand. Bangladesh’s total scrap imports (bulk + containers) are expected to cross 4.3 MnT by the end of CY’20 and are likely to breach 5 MnT mark by CY’21. Presently Bangladesh imports 3.7 MnT of ferrous scrap (bulk + container) annually, as of CY’19.

To know more about the Bangladesh steel industry’s growth story, increasing scrap, DRI and HRC imports, changes in its ship-recycling industry and other latest news from the industry, download the Bangladesh Newsletter attached below:

 

[Bilal9]

More from Steel Mint on Bangladesh Steel sector

SteelMint analysis: Bangladesh likely to improve scrap imports to raise steel melting capacity by 2025​

• Bangladesh set to increase steel melting capacity around 13 mnt by 2025
• BSRM, AKS, GPH and many other mills are setting up additional capacity
• Bashundhara, Meghan & Akij entering steel business

Bangladesh, one of the largest ferrous scrap importers in South Asia, is likely to witness an increase in steel melting capacities from 9 million tonnes (mnt) per annum currently to around 13 mnt by 2025 due to the growing demand for steel, cement, power and upcoming infra projects.

Renowned steel producers in Bangladesh like BSRM, AKS, GPH, and many other mills are setting up additional capacity and facilities to cater to government-funded infrastructure projects in the coming years.

Bashundhara Group is expanding its capacity to 1.2 mnt (EAF) in the 1st phase and 2.2 mnt (DRI) in the 2nd phase; Meghna by 1 mnt (EAF); AKS and Unitex by 800,000 t; BSRM by 500,000 t; and Akij by 300,000 t.

Why is Bangladesh an emerging economy?

• GDP growth rate: The economy of Bangladesh has a projected GDP growth rate of 6.4% for FY’23 as an emerging and fastest growing economy after India in South Asia.
• Increasing steel demand for govt-funded projects: Steel demand in Bangladesh may remained supported mainly due to the government-funded infrastructure projects which were launched to stimulate the economy hit by COVID-19. Projects such as the Ashrayan Project, Metro Rail, Karnafuli Tunnel and elevated expressway from Dhaka Airport to Kutubkhali are expected to boost infrastructure construction. Hence, scrap demand is also likely to remain supported this year as well as in 2023.
• Development of port facilities: Due to inadequate port facilities in the country, large ships were unable to enter Chittagong port. However, the Bangladeshi government has started working on projects such as the Matarbari Deep Seaport, which is estimated to be completed by 2026. Once these projected ports are completed, steel manufacturers will be able to import scrap more easily, which will ultimately speed up their production.

Expert opinion

“Over the past five years, Bangladesh has become an integral part of the ferrous scrap trade in the South Asian region. As new steel capacities come onstream, scrap suppliers are looking forward to continuing the close relationship with the country in the years ahead,” stated Zain Nathani, Director, Nathani Group of Companies, India.

Sanjoy Ghosh, Head of Supply Chain, BSRM, said: “Steel industries in Bangladesh are entering into a new phase amid higher demand forecast in line with projected economic growth. Despite the current global economic turmoil, all major plants are into enhancing their capacity and also new plants are trying to create a footprint in the market in order to cater to future demand. So, it is challenging time ahead for entire steel industry.”

Scrap import scenario
Bangladesh is a country which is entirely dependent on scrap for steelmaking. The volume of imported ferrous scrap (both bulk and container) into Bangladesh stood at 2.83 million tonnes (mnt), up 53% in the first half (H1) of 2022 as against 1.85 mnt seen in the same period in 2021.

As Bangladesh is eying over 6% GDP growth in the current year, the South Asian nation is making a concerted effort to spearhead infrastructure spending, which is expected to increase steel consumption going forward. However, it will be interesting to see if demand remains supportive against the backdrop of rising steel capacity.

Join our event to know more on whether Bangladesh’ scrap imports will touch 6 mnt by 2025.

September, 2022 at Hotel Radisson Blu, Chittagong, Bangladesh. The conference will explore key issues like the country’s steel production and demand outlook, global scrap trade flow changes, especially post-the Russia-Ukraine war, the ship recycling scenario, key emerging sectors, price trends and a lot more.

 

[Bilal9]

Another older article with some details....
----------------------------------------------------------------------------------------------------------------

Irochka | dreamstime.com

Bangladesh to expand steelmaking capacity by 4 million metric tons​

Bangladesh Steel Re-Rolling Mills’ Sanjoy Kumar Ghosh, who will speak at SteelMint’s 4th Steel Scrap, Billet & DRI Trade Summit, offers his views on the country's steel sector.

July 1, 2019


Conferences & Events Ferrous Financial International Recycling News

Bangladesh, one of Asia’s emerging steel markets, has seen a rapid increase in its steel production capacity throughout last few years, helping to drive raw material imports of ferrous scrap, pig iron and direct-reduced iron (DRI) further.

Bangladesh Steel Re-Rolling Mills (BSRM), Chittagong, Bangladesh, is a leading steel manufacturing company in Bangladesh with 1.8 million metric tons of installed billet-making capacity. India-based SteelMint interviewed Sanjoy Kumar Ghosh, head of supply chain management at BSRM, to learn about his views on the steel and scrap industries in Bangladesh, offering edited excerpts from the interview, below.
____________________________________________________________________________________

Q: How is Bangladesh performing in terms of economic growth? How do you see the steel industry’s contribution in your country’s economy?​

A: Bangladesh is now the world’s third fastest growing economy, according to media reports. Its GDP (gross domestic product) growth rate is currently 8 percent as per an ADB report (8.2 percent, according to the annual budget in 2019).

A lot of development work is going on across the country, and infrastructural development is one of them. The country is moving forward by all means with a view to applying to the United Nations for its recognition as a “Developing Country” after fulfilling the criteria set by the UN in 2018. If we consider 8 percent GDP growth, it means at least 16 percent growth indication for the steel sector in the coming years.

Q: What is the country’s present per capita steel consumption? How much growth is expected in the coming years?​

A: Per capita consumption of steel in Bangladesh has seen a significant rise and almost doubled in five to six years to 45 kilograms (99 pounds) in 2017. As per estimates, per capita steel consumption may rise to 73 kilograms (161 pounds) by 2022. A lot of infrastructural work, along with mega government projects, is running in the country, and it would take another five to seven years to finish them. So, the demand for steel will be there in the future.

Q: What are the upcoming expansion plans by steelmakers and major infrastructure projects being developed by the government?​

A: Buoyed by the increasing demand for steel amid the implementation of mega infrastructure projects, many of the larger mills have signed up for capacity expansion and other infrastructural activities for improving power generation.

Major steelmakers, including BSRM, have already initiated a few projects to increase their capacity, while a few new companies are waiting to mark their footprint in the steel sector. A lot of infrastructural work, along with big government projects (Padma Bridge, Rooppur Nuclear Plant, Paira Sea Port, the large coal-fired power projects of Matarbari and Rampal, Metro Rail and LNG terminal) are currently going on across the country.

Q: What is Bangladesh’s steel production capacity and how much more capacity can be added in the near term?​

A: At present, the current steel production capacity is estimated to be at 6.5 to 7 million metric tons and it can be said that at least another 3 to 4 million metric tons of steel-producing capacity will be added in the next few years on the back of aggressive expansion plans of leading steelmakers.

Q: How much ferrous scrap did Bangladesh import in the previous years?​

A: According to the data maintained with the customs department, ferrous scrap imports in financial year (FY) 2017 to 18 (July 2017 to June 2018) were recorded at 2.6 million metric tons, and the volume of scrapped ships imports in Chattogram’s ship-breaking market for recycling activities was recorded at 2.3 million metric tons. This year, 2018 to 2019, will be higher than earlier as per customs data.

Q: How much steel scrap demand is being projected in the coming years?​

A: As per customs import data in FY 2017-18, total steel products, comprising raw material (steel scrap), semifinished, finished products and imported scrap vessel quantity (ship breaking) was around 7.7 million metric tons. Among these quantities, around 2 million metric tons comprised finished products and 0.6 million metric tons were semifinished products (HBI, or hot-briquetted iron, DRI and billets). So, the rest of the finished products were needed to be produced domestically. For that we are dependent on imported scraps, scraps generated from ship-breaking yards and other domestically generated steel scraps.

So, to sum up, we can say right now the steel scrap demand in Bangladesh is around 7 million metric tons, which will definitely see a rising trend in the coming years.