Infrastructural development has taken centre stage in Bangladesh in the last decade, with several ongoing mega projects fueling the significant demand for steel. The industry has flourished largely due to the investment of large conglomerates, diversification of steel products, and enhanced production capacity. According to the World Steel Association, the total consumption of steel was approximately 7.4 million metric tonnes in 2022, while the production capacity of steel mills stood at around 9 million metric tonnes in Bangladesh.
The private sector investment brought a significant overhaul to the steel industry in Bangladesh in the early 1990s. Through a resilient growth pace, the current market size of the steel industry in Bangladesh stands at an estimated BDT 55,000 crore (USD 6.2 billion) as per The Business Standard. Moreover, per capita steel consumption is projected to rise from 45kg in 2022 to over 100kg by 2030, indicating a high growth spectrum. Approximately 60% of the manufactured steel is used in government projects, 25% is used by consumers as per The Business Standard, and the rest 15% is reserved for the private sector.
Though having high growth potential, the steel industry, along with its allied industries, has been grappling with challenges in recent times owing to several critical factors like currency devaluation, high inflation, and a high margin on LC opening. This, in turn, has translated to supply chain disruptions, logistical inefficiency, an energy crisis, and a rise in financing costs. However, the easing of the economic slump would dramatically turn the tide in the steel industry’s favour with the usual resumption of mega projects coupled with government policies. Undoubtedly, the steel industry will play a pivotal role in spearheading the industrial infrastructure in Bangladesh and transforming the country’s economic outlook.
Md. Shah Jalal
Editor
IDLC Monthly Business Review