Iron industry has potentials to earn $10b annually

Staff Reporter  :
Business owners and entrepreneurs in the iron and steel industry are optimistic about the country’s potential to generate substantial foreign currency revenues.

They propose that by addressing local demand and strategically focusing on exporting steel and iron products, Bangladesh could earn annual revenues of $10 to $15 billion in foreign currency.

Experts believe that there is a significant potential for growth in the export sector, particularly in steel and iron products.

To capitalise on this potential, there is a need for extensive development and market expansion in this sector, they said.

According to stakeholders, the steel industry is a major player in terms of high investment expenditure.

The development of a country is often measured by its per capita steel consumption. Currently, Bangladesh’s average per capita steel consumption is calculated at 45 kilograms.

With the economy growing, especially in areas where government infrastructure development is taking place, the expectation is that this demand will increase rapidly to surpass 100 kilograms per capita.

The growth in the iron and steel industry in Bangladesh has been noticeable since the 1990s, the stakeholders said.

Entrepreneurs gradually invested in the sector, shifting from using traditional materials to the production of steel. This shift was facilitated by the availability of scrap metal, an essential component in the steel-making process, they said.

While the factories in this industry have faced challenges, such as prolonged closures due to the COVID-19 pandemic, they have managed to recover and continue operations.

However, the recent global downturn in the market, especially in the melting scrap segment, has posed a significant challenge
to heavy industries in the country.

According to information from the Iron and Steel Manufacturers Association and entrepreneurs, ten years ago, the annual production of MS Rod (mild steel rod) in the country was 2.5 million tonnes.

Presently, the demand has increased, and the yearly production and market supply have reached approximately six million tonnes.

Despite the challenges, several new companies with modern technology are expanding their production capacity.

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The factory’s capacity expansion is projected to reach one billion tonnes in the next two years.

At that time, the annual production of MS rods is expected to reach an average of seven million tons.

The total investment in this sector by entrepreneurs is approximately Tk 50 billion. Currently, about three million people are directly or indirectly involved in this industry.

The private sector has been playing a vital role in the industry’s growth, driven by mega projects, economic development in average-income regions, rural development, and housing construction, along with power plants.

This has spurred investments in modern technology and factory expansions, boosting production capacity.

Mohammad Jahangir Alam, the President of the Bangladesh Steel Manufacturers Association, suggests that stakeholders in the iron and steel industry need to identify the challenges in export and work on proposals for policy-makers.

He emphasises that the iron and steel products, especially those of international standards, can significantly contribute to the country’s exports.

He claims that Bangladesh is capable of meeting 50 percent less of its demand for iron and steel products through local production.

The use of advanced technology and factory expansion by local companies has positioned Bangladesh as a potential exporter of iron and steel products to Commonwealth countries, including Africa.

Therefore, it is possible to earn foreign currency amounting to $10 to $15 billion annually from this sector, he said.

Business owners are advocating for special incentives from the government to facilitate the transformation of iron and steel products into an export-oriented industry.

They propose special privileges, including reduced duties on the import of raw materials for export-oriented industries, partial bond facilities, and financial assistance for export-oriented iron and steel factories.

These measures, along with improved supply chain management, can enhance the competitiveness of Bangladeshi iron and steel products in the international market, they said.

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