Bangladesh eyes doubling steel production by 2030

Representational image. Photo: Collected

In some ways, a country's development can be measured by its per capita steel consumption. The current average per capita steel consumption in Bangladesh is estimated at 45kg. In 2030, this demand is expected to rise to more than 100kg per capita. The production is also increasing in line with the demand at a rate of 10%.

After 10 years, the total production of the steel sector in the country is estimated to reach 1.6 crore tonnes — twice the current production level.

Top entrepreneurs of the country say the production capacity is being increased in advance, keeping in mind the future demand. New, high-strength specialised rods are continuously being added to the production list.

However, there are also new challenges, they say.

Due to the fact that the factories were closed for a long time amid the pandemic, the industry is counting huge losses. Entrepreneurs have had difficulties paying employees and even keeping the business running. And even though the factories are operating again, the shortage of melting scrap in the world market has affected them the most. 

But the industrial sector of the country has started to turn around after overcoming this disaster.

According to the Bangladesh Steel Manufacturers Association and entrepreneurs, even 10 years ago, the country was producing 2.5 lakh tonnes of MS Rod annually. At present, according to the demand, the average annual production and marketing is about 60 lakh tonnes.

However, the combined production capacity of steel (rod) has increased to 90 lakh tonnes due to the steps taken to expand the factories of some companies, including those of BSRM and GPH Ispat.

The pace at which the factory capacity is being expanded will rise to 1 crore tonnes in the next 10 years, i.e. 2030. 

Salim Uddin, professor of Chittagong University and Chairman of House Building Finance Corporation, told TBS, "Steel is the biggest sector among construction materials. The market size in this sector will be Tk50,000 crore. 

"Many big projects are being implemented in the public sector. It will increase continuously for the next 10 years i.e. till 2030. There is no alternative to using the latest technology to ensure the highest standards in steel products. It is expected that Bangladesh will move towards a basic steel industry at some point," the professor added.

In the past few years, the implementation of mega projects in the government sector, the development of economic zones, the increase in the construction of pucca houses in villages with expatriate income, in addition to power plants, have been the main reasons for the growth of the steel sector. In this context, entrepreneurs are focusing on increasing production by expanding modern technology and factories.

BSRM Group Deputy Managing Director Tapan Sengupta told The Business Standard that the current demand for steel in the country is 65 lakh tonnes per year.

"It is increasing by 10% every year. At present the total production of steel in the country is more than 80 lakh tonnes," Tapan Sen said.

"A-sector investors are expanding their factories in line with the demand. It is possible to meet the domestic demand of the next one and a half century only with rod-steel produced in the country. But for this, the burden of tax should be reduced," he added.

A brief history of the steel industry

The growth of the steel industry in the country started in the early 1990s when entrepreneurs came forward to invest in the sector. Back then, the raw material for rods was old iron scraps extracted from ships. 

The country's steel sector is growing mainly by relying on private sector investment and diversifying products and transforming production, despite the traditional systems of the first three decades. 

At present 40 modern and 150 traditional factories are producing steel.

BSRM: When talking about the country's steel sector, the first name that comes to mind is BSRM Group. 

The East Bengal Steel Re-Rolling Mills established in 1952 in Chattogram's Nashirabad industrial area was renamed Bangladesh Steel Re-Rolling Mills or BSRM after independence. 

The business was started by the first generation of the company, Akbar Ali Africawala. After that Alihussain Akberali, the son of the founder and the current chairman of the group, has been leading the company for almost 40 years. Changes in steel quality, including the development of high-strength rods, came from his hands. 

Alihussain Akberali's son Aameir Alihussain has joined the company and is now the current managing director of the group.

There is no major or important project in the country where BSRM rods are not being used. 

For instance, 26,000 tonnes of BSRM rods are being used in the Bangabandhu tunnel under River Karnaphuli, said Mehdi Hasan, the head of sales of the company.

Talking about their preparations for the future market, Tapan Sengupta, DMD of the company said their annual rod production is 16 lakh tonnes, and blades are 18 lakh tonnes. 

"We are going to build a new factory in the Mirsarai Economic Zone where over 5 lakh tonnes of steel will be produced. BSRM is moving ahead with the target of raising the combined production capacity to 40 lakh tonnes in both areas," he added.

The company started about 68 years ago and is expanding its business using its expertise and experience in the steel sector. 

In 1983, BSRM started manufacturing quality products by bringing automatic machines from the United Kingdom. The following year, it brought product diversification to the sector with high-strength "cold-twist steel rod". Then in 1987, BSRM took the first step to produce high-strength 60-grade rods of international standard. Later, "Extreme 500 W" was launched in 2008. This rod has more strength than the 60-grade. 

In 2015, 80-grade "BSRM Maxima" was launched for the construction of high-rise buildings, nuclear power plants, tunnels and large bridges. 

BSRM is also preparing special types of anti-salinity rods for earthquake-prone and coastal areas. 

The company is also expanding to other countries by setting up factories in Kenya and expanding business in Hong Kong.

AKS: Another giant in the steel sector is Chattogram-based Abul Khair Group. Although it entered the flat steel market in 1993 through the production of corrugated iron, it started producing rods mainly in 2009. 

The company is marketing the rod under the brand name AKS. Steel production started with the country's first Electric Arc Furnace in the steel market. 

Abul Khair Group's steel plant has an annual production capacity of 1.4 million tonnes of rods. 

In terms of market share, Abul Khair Group has positioned itself as a strong competitor of BSRM with long experience. They are the first TMT (Thermo Mechanically Treated) bars or rods in the market. 

The company has also established a strong position in billet manufacturing. The self-owned Abul Khair Group produces about 1.2 lakh tonnes of billets.

KSRM: Chattogram-based KSRM (Kabir Steel Re-Rolling Mill), which ranks third in the steel sector market, has been producing steel rods since 1984. 

The main entrepreneur of KSRM is Mohammad Shahjahan. The company initially had a production capacity of one lakh tonnes with a semi-re-rolling mill. Europe's Pomini technology later increased its factory's rod production capacity to 8,00,000 tonnes. 

The company is also continuing to increase the production of raw material billet between rods from six lakh to eight lakh tonnes. 

KSRM factory is a "Composite Steel Factory". In this type of factory, international quality rods are produced by maintaining quality standards at every step right from primary raw material (scrap) to rod production. 

At present, KSRM produces 5.5 million cyclic load-bearing rods in 369 mega mills. The company is also importing old ships to ensure the supply of steel raw materials.

Shahriar Jahan Rahat, deputy managing director of KSRM Group, said consumer awareness has increased. 

"As a result, steel has to be produced with utmost importance on quality. We also have several problems like congestion at the ports, which need to be addressed and moved towards a permanent solution," Shahriar Jahan Rahat said. 

For this reason, it is necessary to add more modern equipment along with the construction of new jetties and terminals, the DMD stressed.

GPH Ispat: GPH Ispat has brought modern technology to Electric Arc Furnace with major investments in the steel sector. Using this technology, the highest refined rod is produced in the fastest time. 

The new factory of GPH Ispat Limited is ahead in the efficient use of water. World's most advanced technology is used here for wastewater treatment. In this system, no waste or polluted water is allowed to go out. Rather, all wastewater is treated and reused, thereby helping the natural environment. 

Production is now underway in the new factory at Kumira, Sitakunda, Chattogram, at the cost of about Tk2,500 crore. The company started steel production in Sitakunda in 2008. However, to strengthen its position in the local market, the construction of the new factory began in February 2017. When fully operational, the company's annual rod production capacity, including new and old factories, will be around 10 lakh tonnes. 

GPH's old factory has an annual billet production capacity of 1,68,000 tonnes, but the expanded new factory will produce 8,40,000 tonnes of billets. The new factory will manufacture 500 TMT Bars and rods of various grades as well as various materials for the construction of pre-fabricated buildings including sections, angles, channels, H beams and I beams. 

GPH products have been exported to Sri Lanka, China and several states in India. Last year, GPH Ispat also achieved the feat of exporting billets from Bangladesh to the Chinese market for the first time.

Mohammad Almas Shimul, additional managing director of GPH Ispat told TBS, "The steel sector is growing at an average rate of more than 15% annually. The reason for this is the economic progress of the country. There is a relationship between GDP and the construction sector. If the GDP increases, the construction material market will also increase, it is natural."

"Mega projects are being implemented in the public sector. Economic zones are being developed. There are new power plants. People's purchasing power is increasing again. Economic activity in the public and private sectors has sustained the growth of the steel sector. This growth in the steel sector will continue till 2030," Almas Shimul said.

He said, GPH Ispat is moving forward with a big plan for higher exports. They are making pure steel with new technologies that use oxygen. This technology is very effective in reducing air pollution.

Rahim Steel: Rahim Steel, a subsidiary of Rahim Group in the steel sector, started its journey in 1968. Re-rolling mills were established and 40 grade rods were manufactured in its factory from the beginning. A second factory was built in 1976. 

At present, Rahim Steel is producing various types of steel products including 500 TMT Bars, Hot Rolled Plates, Billets and Shaft Round Bars. They are also the first to market earthquake-resistant rods in the country.

Mostafa Hakim Group: Mostafa Hakim Group has expertise in the manufacturing and marketing of steel products over four decades. The group's two subsidiaries Golden Ispat Limited and HM Steel Industry Limited have recently expanded their business in the steel market. 

The steel production capacity of Golden Ispat Limited was 2.5 lakh tonnes per annum. However, from this year, the production capacity has been increased to seven lakh tonnes through HM Steel. 

The company is supplying quality rods for the construction of economic zones with ongoing mega projects.

Baizid Steel: In 1986 in Nasirabad, Chattogram, Baizid Steel was launched by entrepreneur Abu Bakr Chowdhury. Belgium's Temco technology was used in the factory in 2010 for rod production. At present, the annual production capacity is about one lakh tonnes. The company has a billet factory in addition to its rod manufacturing plant.

Abu Bakr Chowdhury, managing director of Bayezid Steel Industries Limited, said, "It is important to take tax issues seriously. Considering the heavy industry, this sector also deserves to get the government's policy support quickly."

Anwar Ispat: Anwar Group is expanding their factory step by step considering the internal demand of the steel sector. Khaled Iron and Steel Mills Limited was renamed Anwar Ispat Limited in 2000. 

The company currently has an MS Rod production capacity of three lakh tonnes per annum. Besides, there is another 1,90,000 tonnes of billet production capacity. The organisation is working with the aim of increasing the existing capacity.