We have reasons to feel positive about emerging as a global player in the steel industry
Bangladesh has a consistent economic growth over the last decade and maintained an average GDP growth more than 6%. According to the World Bank forecast average GDP growth of Bangladesh in 2016-2018 will be 6.8%, which is much higher many countries in the world who boast to have better economies than ours one. The International Monetary Fund (IMF) has recognized Bangladesh as the second fastest growing major economy in the world after India. Bangladesh government has taken many initiatives to encourage the development of infrastructure sector of the country to become an industrialized nation, moving forward from from its agriculture and service based economy. The demand for steel will inevitably grow in pursuit of achieving that goal. In recent years it has been observed that, Bangladesh government has invested in the development of roads & highways, railway networking, power sector, Special Economic Zones (SEZ) and other facilities needed for industrialization. All these development activities are sure to boost up the steel industry.
Bangladesh has a proud heritage for the art of steel making and shaping for a long time. Even in the Pakistan period the largest steel mill of Pakistan was established at Chittagong in 1967. Currently more than 400 steel factories are in operation, among which top 3 companies supplies more than half of the nation’s demand. Bangladesh has an estimated market size of Tk 300 Billion in the steel sector and experiencing an upsurge in demand. Some steel demanding industries like ship building, automobiles, home appliances etc. are triggering the demand of steel even more.
Bangladesh is considered as one of the most densely populated countries of the world and stands on 8th largest populated country. For its huge population and scarcity of land area, Bangladesh is in the need of vertical infrastructural growth for the housing. For this reason real estate and developer industry emerged in Bangladesh after 2000. Housing industry had a great boom in 2005-2010, but eventually it started to fall in recent years due to the price hike of land and building materials; scarcity of utility connection like gas and electricity, lack of reliability on the developer company, untapped middle and lower middle income group and many other reasons. Even though domestic steel demand is growing depending on the individual initiatives. The growth of steel industry is driven mostly by government spending on infrastructure projects, which accounts for 40% of steel consumption in Bangladesh.
THE WAY BANGLADESHI STEEL PRODUCTION CAPACITY AND DEMAND IS GROWING WE CAN HOPE THAT, IT WILL NOT TAKE TOO MUCH TIME TO HAVE A POSITION ON THAT
Now the top steel producing country of the world is China with 808MnT/year. Japan is in the second position with 104.08MnT, followed by India in the third position with 95.6 MnT. Ukraine positioned tenth with 24.2Mnt and Belgium owns twentieth position with the production of 7.7Mnt on the top 20 steel producing countries by World Steel Association (WSA)-2016.
According to the projection of WSA, Bangladesh is going to have a 50% growth in steel production in 2017 compared to 2016. WSA also forecasts that Bangladesh will produce 4.5Mnt in 2017. The gap between the world’s top twentieth steel producing country and Bangladesh is narrow which is only 3.5Mnt. The way Bangladeshi steel production capacity and demand is growing we can hope that, it will not take too much time to have a position on that top 20 list. Bangladesh has one of the largest ship breaking yards of the world which is one of the major sources of raw materials of steel production. In addition to this, Bangladesh already positioned in number 8th in top most scrap importing countries of the world and 4th among the Asian countries.
Bangladesh is now considered as a country of huge opportunity and a role model for countries with similar economic structures. Steel industry undoubtedly will play a vital role in that ballgame. This industry is not only helping to enhance the total GDP of the country, but also creating huge employment. In addition, some multinational steel producing companies are showing their interest and trying to avail land areas in Special Economic Zone (SEZ) to establish their steel manufacturing facilities, which shows glaring prospects of foreign direct investment in this sector. In conclusion we can say that with a better strategy from the private sector and policy and infrastructural support from the government, Bangladesh can emerge as a major player in the global steel industry.
The writer is the Director of Marketing & Sales at KSRM Steel Plant Limited