Steel industry to heat up as new players joining race

Bangladesh’s steel industry is seeing the entry of several large business houses, while existing steelworks are looking to expand their capacities to meet rising demand for the key construction material.

Meghna Group of Companies, PHP Group of Industries, Bashundhara Group and Anwar Group of Industries are among the conglomerates setting up new factories or 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.

With the two new mills, Bashundhara Pre-fabricated Building Manufacturing Industries and Bashundhara Multi Steel Industries, Bangladesh will be able to produce more than 2 million tonnes of hot-rolled coils annually. The factories are expected to be fully operational by mid-2023. This is part of BSRM’s plan to establish a re-rolling mill with 7 lakh tonnes of steel-making capacity.

Anwar Group is set to invest over Tk 4,000 crore to build a new factory in Gajaria of Munshiganj, which will raise its market share. The factory’s production capacity will 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.

” We are proceeding carefully considering the current economic conditions,” he said. The group is hoping to secure foreign financing for the project. The new factory is expected to create 4,500 jobs. Anwar’s present factory in Tongi, Dhaka produces approximately 3 lakh tonnes of rods per year. Abul Khair Steel of Abul Khair Group, GPH Ispat, BSRM, and Kabir Steel Re-Rolling Mills of Kabir Group of Industries currently satisfy more than half of the annual demand for rods in the country. The size of the market is approximately Tk 72,000 crore as per current rates.”

However, domestic demand for steel is increasing rapidly due to various mega projects and infrastructure development activities being implemented across Bangladesh.

Indian market analysis firm SteelMint forecasts that the demand for steel will increase by 6 per cent to 7 per cent per year in Bangladesh until 2025.

Despite this growth, Bangladesh’s steel consumption is still significantly lower than the global average. Currently, per capita consumption is only 45 kilogrammes, compared to the global average of 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.