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“Legal complexity and irregularities in ports have put steel manufacturers in the soup. Apart from this, raw materials, dollar rate, gas, electricity, and oil prices hike as well as complexities created by NBR officials have halted our business,” Managing Director of Shahriar Steel Rerolling Mills (SSRM) Sheikh Masadul Alam Masud told The Business Post’s Rafikul Islam in an interview
The SSRM started its journey in 1992; please tell us about your company’s success story.
At first, I started my business through scrap supply. Later, I set up a small-scale steel mill in Jatrabari area. Now, my company has a production capacity of around two lakh tonnes per annum.
I spent a lot of time and struggled a lot to form the Bangladesh Steel Manufacturers Association (BSMA). We have been successful to amend a good number of laws for the sake of the sector’s development. Now I am doing business with a reputation for providing quality products to the market which is my key to success.
As you were founder chairman of BSMA, what type of challenges do you face in the industry now?
The main challenge we are now facing is to adjust the prices of our products with the local and international markets. We have been facing one after another adverse situation since the beginning of the Covid-19 pandemic in Bangladesh. The pandemic and the Russia-Ukraine war created a volatile situation in our steel industry. We had to face container and scrap shortages.
The sudden dollar price hike posed another challenge for rod manufacturers as the banks became reluctant to open LC (letter of credit) for raw materials import. Violating professionalism, the banks made lucrative profits from the soaring rate of the dollar. The banks profited by selling cash, but the country lost a lot economically. There was a lack of government monitoring. The government could control the dollar rate through proper monitoring.
In the last several months, we could not import raw materials properly due to the LC problem. The manufacturers were forced to carry on production with their limited stock of raw materials. As a result, they incurred losses.
How many types of rods do you manufacture? What kind of raw materials are used to produce rods? What is your current production per annum?
I mainly manufacture 500W rod which is used in private projects and 60-grade rod which is used in government projects. The size of those items is from 8mm to 42mm. Besides, I manufacture coal, square bar, and angle channel items as well.
I import the best quality melting scraps from Australia, New Zealand, UK, and EU regions, and collect raw materials from the local shipbreaking sector to manufacture quality rods.
Now, I produce one lakh tonnes of rod per annum. My production capacity is nearly two lakh tonnes in a year. I don’t compromise quality.
The recent abnormal hike in rod prices made a huge impact on the construction sector. Please, tell us the reasons behind the rod price hike.
The prices of rods increased due to different reasons including soaring dollar rates, raw material prices, freight fare hikes and LC problems. However, the rod prices have recently been reduced by Tk 2,000-3,000 per tonne due to declining demand. When the price of any product is high, its market demand falls automatically. Now my products are sold between Tk 85,000-87,000 per tonne.
Many allege that rod manufacturers increased its price to an all-time high (nearly Tk 1 lakh per tonne) through syndication, what is your opinion in this regard?
There are 35 re-rolling brand mills in the country meeting 70-80 per cent of the demand. And, there are about 100 manual or non-brand companies that meet the rest of the demand. So, there is no chance of syndication in the competitive market.
Do you face any problems in sourcing countries while you import raw materials?
The price of raw materials is a key problem at the sourcing level. Now, we have to purchase a tonne of scraps at $500-550 which was once $250-300. Besides, products are not available at sourcing sites, and container fare is much higher following fuel price hike.
However, the price of the rod will reduce in future if the dollar rate becomes normal, raw materials prices decline further and the cost of production comes down.
Do you look for any government policy support to strengthen the manufacturing sector?
The problems persist at all stages here. Transparent administration has not been ensured yet in the country. The genuine traders have to pay bribes too following unethical practices at different segments of the administration.
If port authorities want to bankrupt a businessman, it is easy in our country. I had to pay two crore taka as demurrage recently due to legal complexity.
The officials of the National Board of Revenue (NBR) also harass us in different ways. After the opening of the Padma Bridge, we hoped that huge construction activities will begin in 21 southern districts of the country. But the development has become stagnant due to soaring construction materials prices. Our production is falling as new big projects are not taken.
However, the challenges in our sector should be resolved soon to make the rod sector vibrant as it is one of the key construction materials for infrastructure development.
What is your future plan?
I want to build my business as a corporate company and play a key role to expand the steel industry.
