Manual, semi

Nov 06, 2023

The steel industry is facing various crises: the country's market has become unstable due to an increase in raw material prices in the international market, a decrease in imports due to the dollar crisis, and an increase in production costs caused by a shortage of gas and electricity supply.

Nearly 90% of the re-rolling mills in the industry, which has grown over four decades, have shut down in the last three years.

Entrepreneurs say the price of steel raw materials in the global market was already high in the last two years when the global economy had begun to normalise after the pandemic. Then, when the Russia-Ukraine war broke out, the price of raw materials increased further. The price of the rod has exceeded all previous records.

In the final half of last year, when the prices of raw materials normalised in the world market, the prices of rods also came down a little. Although the prices in the world market decreased, at the same time, the import cost did not decrease due to the increase in the exchange rate of the dollar in the country.

Besides, new uncertainty has been created due to the gas and power crises. Most of the factories stop production for half the day due to the energy crisis, and costs increase as factories cannot run uninterrupted. As the government increased the prices of gas and electricity, the production cost of the rod also increased.

According to industry sources, the production cost of rods has increased by at least 30% in the last two years. But 90% of re-rolling mill rod production has already stopped due to the non-adjustment of the selling price with production costs.

Sarwar Alam, director of HM Steel, told The Business Standard, "Although the production cost of rods has increased, it cannot be adjusted with sales. As a result, many factories have been forced to stop production. Some companies are still continuing to pay factory workers to somehow keep production going. Even the surviving companies have reduced their production by 25-50%."

Mohammad Lokman, secretary to the Chattogram Steel Re-Rolling Mills Owners Association of Bangladesh, said, "There were about 50 steel factories in Chattogram including auto (75 grade), semi-auto (60 grade), and manual (40 grade). Of these, 43 factories have been closed due to the inability to adjust the selling price with the cost of production. As a result, about 30,000 workers have become unemployed."

Jasim Uddin, chairman of Shitalpur Steel Re-Rolling Mills Limited, said due to price hikes, the demand for 60-grade and normal 40-grade rods has decreased in the market. As a result of successive price hikes, the price of rods has gone beyond the affordability of the lower and middle classes. Due to this, there is stagnation in the construction industry as well. At present, rods are being bought and sold only for the upper class, various institutions, and government projects.

Most of the closed factories are manual. Moreover, some semi auto factories are also closed. Only the auto factories have somehow kept production normal by buying raw materials at higher prices.

There are three types of steel mills in the country: automatic, semi-automatic, and manual. Among them, there are about 35 automatic mills across the country, including BSRM, KSRM, and AKS. And the mills for small and medium scale entrepreneurs are semi-auto and manual.

Among the semi-auto mills, Peninsula Steel, SL Steel, Nazia Steel, BM Steel, Universal Steel, Balaka Steel, and Ambia Steel were shut down last year.

Earlier, Ratanpur Steel Re-Rolling Mills (RSRM), Ehsan Re-Rolling Mills Ltd, Rising Steel, MK Steel Builders Ltd, Islam Steels Ltd, Unique Steel, Khalil Steel, Bhatiari Steel, Majid Steel, Manti Steel, Brothers Ispat, Ambia Steel, Hillview Steel, Super Steel, Shafiul Alam Steel, Dinar Steel, and MT Steels Limited closed in the last two years.

Rise of Steel / re-rolling mills