Sluggish demand followed by a spike in raw material prices pushed the local mild steel (MS) rod makers in a precarious position in 2020 amid the virus pandemic.
According to traders, inconsistency in the taxation policy for the sector and a shortfall of working capital also worsened the situation for steel makers.
"We went through a volatile period in 2020 and are likely to enter another tough year for the pandemic," said Shahriar Steel Rerolling Mills managing director Sheikh Masadul Alam Masud.
The sector somewhat rebounded after easing hard lockdown with the resumption of building work in both public and private sectors in mid-2020, he added.
"Unfortunately, we're facing a setback due to a hike in raw material prices globally amid waves of infection," said Mr Masud.
The melting scrap has been sold at $470 per tonne in recent times which was sold at an estimated $270 in the pre-pandemic period.
Mr Masud also said that local ship-breakers have imported a lower number of ships in recent times considering the losses they incurred during Covid-19.
MS rod accounts for almost one-third of a building project, he said, adding that this price spiral would jeopardise cement, ceramic and brick-building sectors.
Steel millers have to pay double taxes to some extent for inconsistencies in the policy, Mr Masud cited.
"The millers have to pay extra money as advanced tax and often they don't get the return after adjustment."
Data available with the Trading Corporation of Bangladesh (TCB) shows the price of 60-grade MS rod of different brands rose by 14.55 per cent in a month.
The 60 grade or 400W per tonne rod was selling between Tk 62,000 and 64,000 per tonne on Monday, which was between Tk 54,500 and 55,500 a month ago.
The price rose by almost 4.0 per cent compared to the situation a year ago, revealed the TCB data.
"Usually, rod price following higher demand goes high in dry season," said Tanim Rahman.
The Dhaka city's North-South road-based retailer said he passed one of the dullest years due to weak demand.
"The business is still very dull, although it's peak season for construction work," Mr Rahman observed.
When asked, Bangladesh Steel Manufacturers Association secretary general Md Shahidullah said the year 2020 has been the worst for steel makers in a decade.
"Steel manufacturing is one of the hardest-hit sectors due to the outbreak of coronavirus in 2020," he added.
The demand sagged as work on different building projects has remained suspended for months leading to lower sales of steel products, Mr Shahidullah stated.
Local steel makers are capable of manufacturing 9.0-million tonnes in a year.
But they could sell hardly 4.5-million tonnes in 2020, the association leader said, adding that they sold nearly 6.0-million tonnes in 2019.
"You can hardly survive with the production of lower than 70 per cent or an estimated 6.0-million tonnes in a year," he said.
The millers have to pay advance tax that eats away the working capital of such investment-centric business.
"Besides, banks couldn't provide adequate money for millers from stimulus package," Mr Shahidullah said.
He suggested that the government extend its support for the sector by easing tax burden and extending term for loan payments to help the sector survive.
