Slow pace of development work puts steel sector into difficulty
Saturday, 13 September 2008
M Azizur Rahman
The country's billion dollars steel sector is now passing through a hard time as local sales dropped significantly despite the price fall of scrap vessels in the international market, traders said.
They said the country's steel sector has tremendous potentials for growth, but inadequate development works couple with government intervention has pulled down the sales by almost half compared to that of the last year.
Industry experts said private sectors have so far poured investments worth US$10 billion in the country's potential steel sector having over 350 steel and re-rolling mills across the country.
The country's steel production reached 3.0 million tonnes per annum until 2007 from around 2.0 million tonnes five years ago, driven by the industrial growth and booming real estate sector.
But the drastic fall in the government's infrastructure development projects coupled with measures to streamline the real estate sector has discouraged construction resulting in sharp fall in steel sales in the local market.
"Steel sector is a lifeline of Bangladesh," said Alihussein Akberali, chairman of Bangladesh Steel Re-rolling Mills (BSRM), the country's leading steel producer.
But to ensure its sustainability and maintenance of a sound growth the government must have to invest in the infrastructure development projects, he said.
He said the industries are not producing much steel due to sharp fall in demands.
"My factories are now running at one-third of its optimum capacity due to inadequate demand," BSRM chief Akberali said.
While the government and the realtors have alleged that the sharp rise in the prices of steel products, especially of mild-steel (MS) rod slowed down the sales of steel products across the country.
Echoing the realtor's sentiment general secretary of the Bangladesh Steel Re-rolling Mills Association Sheikh Masadul Alam Masud said that they were not getting scraps at lower prices despite their fall in the international market.
"The price of melted scraps fell at least by US$ 150 a tonne recently, but the scrap vessel owners are not selling their products at lower rates," he alleged.
He claimed that the steel makers were now incurring losses by selling their products at the rates lower than their production cost.
'We are now selling MS rod at Tk 60,000 a tonne, which was Tk 72,000 a tonne," he added.
Masud urged the government to initiate development works to ensure sustainability of the steel mills and jobs of thousands of workers in sector.
"Consumption by the government accounts for 70 per cent of the total production and any drastic fall in project works will jeopardise the growth of the sector," he warned.
Mirza Abu Mansoor, another steel mill owner, alleged that despite the opening up of the import of old vessels a syndicate was still involved in market manipulation.
The fall in Chinese demand for scrap vessels following the end of Olympics and the decline in oil prices have depressed the demand for scrap vessels in the international market, he said.
As a result the prices of scraps fell by $300 a tonne from the previous $800 a tonne in the international market, said a steel mill owner.
But the syndicate is refusing to sell scraps at lower prices to the steel makers, he alleged.
The country's billion dollars steel sector is now passing through a hard time as local sales dropped significantly despite the price fall of scrap vessels in the international market, traders said.
They said the country's steel sector has tremendous potentials for growth, but inadequate development works couple with government intervention has pulled down the sales by almost half compared to that of the last year.
Industry experts said private sectors have so far poured investments worth US$10 billion in the country's potential steel sector having over 350 steel and re-rolling mills across the country.
The country's steel production reached 3.0 million tonnes per annum until 2007 from around 2.0 million tonnes five years ago, driven by the industrial growth and booming real estate sector.
But the drastic fall in the government's infrastructure development projects coupled with measures to streamline the real estate sector has discouraged construction resulting in sharp fall in steel sales in the local market.
"Steel sector is a lifeline of Bangladesh," said Alihussein Akberali, chairman of Bangladesh Steel Re-rolling Mills (BSRM), the country's leading steel producer.
But to ensure its sustainability and maintenance of a sound growth the government must have to invest in the infrastructure development projects, he said.
He said the industries are not producing much steel due to sharp fall in demands.
"My factories are now running at one-third of its optimum capacity due to inadequate demand," BSRM chief Akberali said.
While the government and the realtors have alleged that the sharp rise in the prices of steel products, especially of mild-steel (MS) rod slowed down the sales of steel products across the country.
Echoing the realtor's sentiment general secretary of the Bangladesh Steel Re-rolling Mills Association Sheikh Masadul Alam Masud said that they were not getting scraps at lower prices despite their fall in the international market.
"The price of melted scraps fell at least by US$ 150 a tonne recently, but the scrap vessel owners are not selling their products at lower rates," he alleged.
He claimed that the steel makers were now incurring losses by selling their products at the rates lower than their production cost.
'We are now selling MS rod at Tk 60,000 a tonne, which was Tk 72,000 a tonne," he added.
Masud urged the government to initiate development works to ensure sustainability of the steel mills and jobs of thousands of workers in sector.
"Consumption by the government accounts for 70 per cent of the total production and any drastic fall in project works will jeopardise the growth of the sector," he warned.
Mirza Abu Mansoor, another steel mill owner, alleged that despite the opening up of the import of old vessels a syndicate was still involved in market manipulation.
The fall in Chinese demand for scrap vessels following the end of Olympics and the decline in oil prices have depressed the demand for scrap vessels in the international market, he said.
As a result the prices of scraps fell by $300 a tonne from the previous $800 a tonne in the international market, said a steel mill owner.
But the syndicate is refusing to sell scraps at lower prices to the steel makers, he alleged.