Ship-breaking industry, the only scrap-iron source for feeding the domestic steel and re-rolling mills, is in trouble stemming from low demand and price variations, entrepreneurs said.
The import of scrap ships in the last three years has declined 20 per cent as the breakers are not getting enough supply order from the mills.
Hefazatur Rahman, president of Bangladesh Ship Breaking and Recycling Industries (BSBRA), said in the year 2010 the demand for scrap iron in the steel mills was 2.3 million tonnes, which plummeted to 1.8 million tonnes last year.
As per estimation, he added, the price of scrap iron in the international market is higher than that of the local market. The current decline may persist due to non-recovery of sluggish housing business, he predicted.
Mr Rahman said the demand for scrap iron in the steel and re-rolling mills is on a gradual decline as most of the mills have cut down their production for the depressed market.
Furthermore, he observed, big investments in steel mills by some leading conglomerates have changed the trend of use of iron rods and steel products among the users.
"Currently, product marketing by the big steel mills is letting people purchase steel and iron rods from the high technology-based big mills," a market-insider said.
He said as both the steel and re-rolling mills reduced production volumes so demand for scraps also got reduced.
The high technology-based big mills are importing major portion of their required billets to manufacture 60-grade rod used in heavy infrastructure like flyovers, bridges and high-rise buildings.
According to another office bearer of BSBRA, only 5 per cent scraps out of total demand for producing billets to manufacture high-grade steel products are possible to meet locally.
According to another ship-breaker, there were 140 ship-breaking companies few years back. But at present the number has got squeezed to maximum 60--and only some big companies are doing a good business.
He said the closure of ship-breaking companies one after another and use of imported billets may make the local steel and re-rolling industry import-dependent.
The current downturn and closure of the ship-breaking industries would continue as new investments are not taking place and even the existing are becoming vulnerable.
The BSBRA president said the ship-breakers are currently working under many rules and regulations regarding environment and safety. And due to this, some investors are getting discouraged from expanding their business.
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