The country's steel rod manufacturing sector is going through a tough time due to lower demand for the key construction materials and soaring raw material prices in the global market amid the ongoing Covid pandemic, insiders have said.
They also said the demand decreased to a level lass than half of the usual period, apparently posing a threat to the sustainability of many factories in the long run.
They are selling the metals at lower prices and the operational cost went higher mainly due to the hike in raw materials' price, they added.
The sector, which has been growing at a significant rate in the last several years, is now struggling hard due to the pandemic, said Md Shahidullah, a leader of the country's steel makers.
Many factories are now running below the breakeven point, he said, adding that the continuation of such a trend could lead to a closure of the factories, he said.
Responding to a query, Mr, Shahidullah, Secretary General of the Bangladesh Steel Manufacturers Association (BSMA),said the construction work at both the public and private sectors has been slow for some time now due to the pandemic.
The overall production has decreased to around 40 per cent than usual time, leaving huge production capacity unused, said Md Shahidullah, Managing Director of Metrocem Ispat Ltd.
"Our annual demand has been ranging between 5.5 million and 6.0 million tonnes in the recent years whereas the accumulated production capacity is nearly 9.0 million tonnes," he said, adding that all of the factories are now operating at a limited scale.
There are 34 members, mostly leading and technologically advanced ones, registered with the BSMA, while there are around 200 more steel manufacturing companies in the country.
Mr Shahidullah also said the current tax burden is also holding back the growth of the sector that is much needed for the nation's infrastructure construction.
Stressing on the need for government's support, he said Bangladesh's per capita steel consumption is still limited to 45 kg, which is much lower than many neighbouring countries.
Sheikh Masadul Alam (Masud), Managing Director of Shahriar Steel Rerolling Mills Ltd or the SSRM said the pandemic situation also caused supply disruptions for the raw materials or scrap iron which is now selling at higher prices.
"Currently, scrap iron costs US$ 330-350 per tonne, which was below $300 in the pre-covid period," he said.
Most of the raw materials or scrap metals used by the sector are imported from countries like US, UK, Australia, Canada and Italy.
Scraps from ship breaking are also selling at higher price of Tk 31,000 per tonne which was around Tk 28,000, said Mr Masud, who is a former chairman of the BSMA.
Yet there is an unhealthy competition as many new ventures entered into the market in the recent years and existing ones have enhanced their capacity, he added.
Amid such tough situation, the country's taxation authority is creating pressure on the sector by different means, he said.
"The government collects around Tk 10,000 as different sorts of taxes in different phases of manufacturing and trading per tonne rod," he said, adding such high tax burden is a key barrier to turn around from the present difficult situation.
According to the market monitoring data of the Trading Corporation of Bangladesh or TCB, 60-grade rod was selling at Tk 58,000-59,000 per tonne on Thursday which was as high as Tk 66,000 a year earlier at retail level.
The local market size of steel is estimated to be around Tk 500 billion annually which generated nearly 0.3 million employments.
