Steel makers halve production as Turkey-Syria reconstruction fuels scrap price hikes | The Business Standard
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WEDNESDAY, JULY 23, 2025
Steel makers halve production as Turkey-Syria reconstruction fuels scrap price hikes

Industry

Omar Faruque
14 May, 2023, 10:30 am
Last modified: 08 August, 2023, 12:21 pm

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Steel makers halve production as Turkey-Syria reconstruction fuels scrap price hikes

Over the past month, scrap ship prices in the international market have risen from $525 per tonne to $575 per tonne

Omar Faruque
14 May, 2023, 10:30 am
Last modified: 08 August, 2023, 12:21 pm
Steel makers halve production as Turkey-Syria reconstruction fuels scrap price hikes

The steel industry of the country has already been shaken by the dual shock of the Covid-19 pandemic and the Russia-Ukraine war, resulting in increased raw material prices in the international market and supply chain disruptions. Furthermore, recent power and energy price hikes triggered by the country's dollar crisis have exacerbated the situation.

Another factor has recently been added to the already dire circumstances faced by entrepreneurs in the sector.

The international market is facing a rise in scrap prices once again, attributed to the increasing demand for steel due to large-scale infrastructural rebuilding projects in Turkey and Syria. These projects were initiated after a devastating earthquake hit both countries in February, causing the destruction of thousands of buildings.

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Entrepreneurs in the country's steel sector have reported that the situation has forced them to cut down on rod production by 40%-50%. This has made it extremely difficult for businesses in the sector to stay afloat.

Factory owners are struggling to meet operational expenses, including employee salaries, due to the decline in production and sales. Those who have taken out bank loans to run their factories are facing the most serious financial crises, they said.

KR Steel Ltd, located in Sitakunda, Chattogram, previously produced approximately 200 tonnes of mild steel (MS) rod (60 grade) per day. But its production has now declined to below 60 tonnes.

Two steel factories owned by the Mustafa Hakim Group in Chattogram - Golden Ispat and HM Steel - used to produce around 1,600 tonnes of MS rods per day. Production in the two factories have of late declined by around 40%.

Sarwar Alam, director of Mustafa Hakim Group, said that the steel industry requires a continuous supply of raw materials, electricity and gas. If there is a shortage of these materials, the production cost increases, and the machinery depreciation cost also rises.

"The destination of scrap ships in the international market is currently towards Turkey and Syria, as the Turkish government has gone for a quick reconstruction of the infrastructure damaged by the earthquake. As a result, the scrap market has grown in the international market," he added.

Entrepreneurs are demanding the removal of obstacles in the import of raw materials to overcome the current crisis.

Tapan Sen Gupta, deputy managing director of BSRM, one of the top rod manufacturing companies in the country, said that while big companies are not facing significant problems, small entrepreneurs are struggling. To overcome this crisis, the ongoing obstacles in the import of raw materials should be removed.

Over the past month, scrap ship prices in the international market have risen from $525 per tonne to $575 per tonne. Meanwhile, scrap prices have also increased from $430 per tonne to $460-$465 per tonne during the same period.

The price of scrap and MS rods in the domestic market has also become unstable due to the impact of the international market, with both increasing by approximately Tk5,000 per tonne in the last month. 

In ship breaking yards, melting scrap is selling at Tk68,000 per tonne, up from Tk62,000-Tk63,000 a month earlier. 

Additionally, the prices of steel raw material plates and billets have increased, with plates selling at Tk75,000 per tonne and billets at Tk82,000 per tonne, up from Tk70,000 and Tk78,000, respectively, one month ago.

Meanwhile, the price of MS rods has exceeded all previous records, with MS rods of 75 grade selling at Tk97,000-Tk98,000 per tonne on Saturday, up from Tk94,000 a month ago.

Abu Taher, president of the Bangladesh Ship Breakers Association (BSBA), told The Business Standard that only 20% of the demand for raw materials could be met through import due to domestic and international crises.

Furthermore, the price of scrap in the international market has started to increase again. If this situation persists, the ship breaking sector will have to close down, he added.

According to the Bangladesh Shipbreakers Association (BSBA), only 20-22 out of 160 shipyards in Sitakunda are currently operational.

According to the Bangladesh Steel Re-Rolling Mills Owners Association, the annual demand for steel in the country is around 75 lakh tonnes. Previously, about 50 factories in Chattogram used to supply 40 lakh tonnes of rods. However, due to the closure of around 40 factories in recent years, the production of rods in Chattogram has dropped significantly to only 10-15 lakh tonnes.

On 6 February 2023, an earthquake of magnitude 7.8 struck some regions of Turkey and Syria, resulting in a death toll exceeding 52,000. According to the World Health Organization, more than 2.5 million people were affected by the earthquake.

In response, the Turkish government announced plans to construct over 300,000 houses in the affected areas and complete the process within a year.

Economy / Infograph / Top News

Steel / steel business / steel industry / Steel makers

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