Steel industry needs support and care
Ershad Khandker | Sunday, 6 July 2008
Industrial development depends on the steel industry, while economic growth depends on industrial development. The premise is widely known and accepted, both in scholastic domain and in the practical world, both in theory and in practice. Rationale of the premise is simple - a flourishing manufacturing industry creates jobs and manufactured products are exported for foreign exchange for the country. Manufacturing plants are built with some components of steel, the machinery being used in the manufacturing plants are themselves built with large steel components in them and the finished items of widest variety use steel as a vital component.
The industrial revolution itself started with steel factories being the backbone. Goods where produced and traded. Economies like Japan initiated import of iron ore, which is used to make steel, in large quantities so that supply of steel would be undiminished. Russia, China and India established steel making plants as part of their great economic design for launching the industrialisation process within their socialist and Fabian policies. Steel sector is therefore strategic and the most important sector for the development of the country. The country can use steel for its own development and export to all the countries that are undergoing industrialisation and undertaking a construction boom. Such countries are numerous and exist in all continents of the world.
Steel bars are the vital component that makes it possible for building construction to take place. It would be impossible to make any construction using concrete if steel bars were not used to reinforce the concrete. Many of us have heard the term "Reinforced Concrete' used by architects and other experts engaged in the construction industry. It is this reinforcement of concrete using steel bars that enables buildings and bridges to be constructed because concrete alone could not sustain building construction. There are two types of forces acting in a structure, they are "tension" and "compression" and concrete can take compression fairly well but the tensile forces at play would make the building come down and collapse unless steel bars are not used to reinforce the concrete.
The significance of steel for the future of any economy is therefore understood and recognized in the world. The steel industry needs to be recognised, patronised and tended to with the best possible policies that encourage the sector to grow so that steel is available for industrialisation, construction and export.
China is the largest producer and consumer of steel overtaking the Western world and Japan in just 10 years. China's crude steel production today stands at an astounding 375 million tons. India's steel production has risen from 35 million tons to 51 million tons in just 3 years. Construction boom in Russia and the Gulf has resulted in skyrocketing demand forcing a steep price hike in the global steel market. Since Bangladesh imports raw materials for its own steel industry, local level price of MS Rod and other steel products have risen alarmingly causing a snowball effect in the real estate and other sub-sectors that use steel for industrial purposes. . The price of steel has more than doubled in a span of less than 3 years. Prices of bars used in government and costly private constructions as well as C.I. sheets used in rural construction have also risen in a similar fashion.
Leaders of the steel re-rolling industry have asked the government to allow the steel mills to import ships so that they can produce steel at a cheaper price. Industry leaders have also requested for the reduction of import duty, VAT and advanced tax, which all together constitute 28 per cent of the cost of importing steel. Such a reduction would lead to a fall in the prices of steel products, leaders of the Bangladesh Re-rolling Mills Association stated in a recent press conference. They have stated that fixing the price of rods and other steel products could not be a market-oriented move and this may lead to the producers selling their product below the cost of production causing harm to the business environment.
They have requested that power generators could be imported free of duty easing the cost of using generators for producing captive power. PSI charge could be 0.5 per cent from the current 1.0 per cent. The tariff discrepancy between melting scraps and importing ships should also be sorted out the Steel Re-Rolling industry leaders maintained.
Global demand for steel would only continue to rise. The steel industry is going to be in the thick of the developmental process of the economy just by being such a vital component of development of the manufacturing process. Bangladesh steel industry would face competition locally and globally also, if and when TATA and Essar groups' investment proposals see the light of day. The sector is so invaluable that all governments in the Bangladesh need to understand the importance of this sector as the next big exporter and employer in Bangladesh. The ship breaking and ship building industry have shown the way by garnering millions of dollars of contracts. How wonderful it would be if orders for the supply of new ships could be fulfilled using locally made steel and with proper guidance, Bangladesh could be producing steel and exporting it too. Therefore, the remarks about the importance of this sector could not be considered just rhetorical. The sector should be given confidence to work and produce and advance so that Bangladesh can take its place alongside China and India as the next steel tiger.
The industrial revolution itself started with steel factories being the backbone. Goods where produced and traded. Economies like Japan initiated import of iron ore, which is used to make steel, in large quantities so that supply of steel would be undiminished. Russia, China and India established steel making plants as part of their great economic design for launching the industrialisation process within their socialist and Fabian policies. Steel sector is therefore strategic and the most important sector for the development of the country. The country can use steel for its own development and export to all the countries that are undergoing industrialisation and undertaking a construction boom. Such countries are numerous and exist in all continents of the world.
Steel bars are the vital component that makes it possible for building construction to take place. It would be impossible to make any construction using concrete if steel bars were not used to reinforce the concrete. Many of us have heard the term "Reinforced Concrete' used by architects and other experts engaged in the construction industry. It is this reinforcement of concrete using steel bars that enables buildings and bridges to be constructed because concrete alone could not sustain building construction. There are two types of forces acting in a structure, they are "tension" and "compression" and concrete can take compression fairly well but the tensile forces at play would make the building come down and collapse unless steel bars are not used to reinforce the concrete.
The significance of steel for the future of any economy is therefore understood and recognized in the world. The steel industry needs to be recognised, patronised and tended to with the best possible policies that encourage the sector to grow so that steel is available for industrialisation, construction and export.
China is the largest producer and consumer of steel overtaking the Western world and Japan in just 10 years. China's crude steel production today stands at an astounding 375 million tons. India's steel production has risen from 35 million tons to 51 million tons in just 3 years. Construction boom in Russia and the Gulf has resulted in skyrocketing demand forcing a steep price hike in the global steel market. Since Bangladesh imports raw materials for its own steel industry, local level price of MS Rod and other steel products have risen alarmingly causing a snowball effect in the real estate and other sub-sectors that use steel for industrial purposes. . The price of steel has more than doubled in a span of less than 3 years. Prices of bars used in government and costly private constructions as well as C.I. sheets used in rural construction have also risen in a similar fashion.
Leaders of the steel re-rolling industry have asked the government to allow the steel mills to import ships so that they can produce steel at a cheaper price. Industry leaders have also requested for the reduction of import duty, VAT and advanced tax, which all together constitute 28 per cent of the cost of importing steel. Such a reduction would lead to a fall in the prices of steel products, leaders of the Bangladesh Re-rolling Mills Association stated in a recent press conference. They have stated that fixing the price of rods and other steel products could not be a market-oriented move and this may lead to the producers selling their product below the cost of production causing harm to the business environment.
They have requested that power generators could be imported free of duty easing the cost of using generators for producing captive power. PSI charge could be 0.5 per cent from the current 1.0 per cent. The tariff discrepancy between melting scraps and importing ships should also be sorted out the Steel Re-Rolling industry leaders maintained.
Global demand for steel would only continue to rise. The steel industry is going to be in the thick of the developmental process of the economy just by being such a vital component of development of the manufacturing process. Bangladesh steel industry would face competition locally and globally also, if and when TATA and Essar groups' investment proposals see the light of day. The sector is so invaluable that all governments in the Bangladesh need to understand the importance of this sector as the next big exporter and employer in Bangladesh. The ship breaking and ship building industry have shown the way by garnering millions of dollars of contracts. How wonderful it would be if orders for the supply of new ships could be fulfilled using locally made steel and with proper guidance, Bangladesh could be producing steel and exporting it too. Therefore, the remarks about the importance of this sector could not be considered just rhetorical. The sector should be given confidence to work and produce and advance so that Bangladesh can take its place alongside China and India as the next steel tiger.