Efficient supply chain for steel industry crucial

The ongoing geo-political upheaval emanating from the war in Europe is beginning to manifest in unfavourable conditions for global trade and commerce. Supply chains have been disrupted, the garment sector is bracing itself to face the consequences in the form of lower orders while economists across the globe have warned of an impending recession.

The steel sector is Bangladesh, reportedly worth Tk. 55000 crore, will also feel the impact of the impediments in supply chain as scrap metal, the raw ingredient for making steel, is imported. According to a report published in this newspaper, Bangladesh and India import scrap iron, which is the main raw material, from Europe and America. It costs about $30 to bring one tonne of scrap from Europe to India and about $50 to bring it to Bangladesh.

The annual steel demand in Bangladesh is now around 8 million tonnes, which will reach around 13 million tonnes by 2025. The cost of steel products in Bangladesh is about 25 per cent higher than that of India.

The reason for the higher cost results because unloading scrap steel in Bangladeshi ports is higher than in ports of other countries.

Be that as it may despite undergoing uncertainties for high raw material prices and foreign currency rates, the country’s steel industry still has a good future as infrastructure demand is booming while the economy resilient.

Experts at a seminar opined recently that the steel plants are far away from the port, leading to additional costs in discharging scrap and bringing it to the factory. Understandably, if the factories were set up in riverside areas, the cost would reduce significantly.

In view of the protracted conflict in Europe plus the unsettling signs of inflation, fuel price hike plus supply chain disruption, all countries, including Bangladesh will have to adopt a series of measures to minimise the damage.

The steel industry is an established and growing industry in Bangladesh. Predominantly based in the port city of Chittagong, the industry has emerged as a major contributor to the national economy. According to experts, the growth of steel industry in Bangladesh is mainly catalysed by the rapid expansion of the country’s shipbuilding and real estate sector, as well as the major investments in various infrastructure projects throughout the country.

To understand the importance of the industry further a look into history is essential. The first ever steel mill was established in 1952 by the H Akberali Group of Industries as the Bangladesh Steel Re-rolling Mills, BSRM. Located at Nasirabad, Chittagong, the plant formed re-enforcing bars and structural sections. The mill gradually prolonged, adopting new technological know-how by setting up a cross-nation European mill in 1987 which incorporated a wire-rod mill.

In 1990s, the actual development began in this sector through the high rise boom. The modern steel industry owes a lot to the real estate sector and the multiplying population in Dhaka. To accommodate people in a limited space, Dhaka’s land became a precious foundation for high rises, which needed top quality steel.

The high rise culture that has its roots in Dhaka soon spread to other districts and in 2022, the apartment lifestyle has come to epitomize modern day living across the country’s towns and cities.

With more mega structures coming up, the demand will soar and therefore, reducing cost of importing scrap metal takes top priority.

Since Chittagong is known globally for scrapping ships, easy transport options can be explore along with setting up plants near the scrap yard.

From a realistic perspective, all industries globally will have to face repercussions of the war so, steel manufacturing nations can form a union to explore ways for buying scrap at reasonable rates and also look into alternative shipment measures.