Steel industry booming on mega projects

[Homo Sapiens]

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12:00 AM, April 28, 2019 / LAST MODIFIED: 12:12 AM, April 28, 2019
Steel industry booming on mega projects
https://www.thedailystar.net/business/news/steel-industry-booming-mega-projects-1735855

Jagaran Chakma

Bangladesh’s steel industry is going from strength to strength thanks to a construction boom and implementation of mega infrastructure projects, said experts and a study report.

A decade ago consumption of steel, which includes mild steel rod, prefabricated steel and corrugated iron sheet, was 1.6 million tonnes and last year it stood at about 7.5 million tonnes, according to industry players.

“The steel industry passed a stellar 2018,” said United Securities in a recent report on the sector.

Tapan Sengupta, executive director of BSRM, one of the leading steel manufacturers in Bangladesh, gave the credit to the government’s mega infrastructure projects.

Government projects account for 35 percent to 40 percent of the total steel consumed in Bangladesh, up from 15 percent a decade ago. And last year seven mega projects picked up steam, according to the report.


“Rapid urbanisation along with faster economic development is also contributing to the growth,” Sengupta said, adding that BSRM’s growth was 12 percent last year in terms of sales.

Today, steel is almost a Tk 50,000 crore industry, according to sector people.

In the past few years a good number of steel and re-rolling mills were set up that use state-of-the-art technologies and churn out world-class products, said Md Shahidullah, secretary general of Bangladesh Steel Manufacturers’ Association.

“So much that the Rooppur nuclear power plant and Padma bridge are being constructed solely with steel manufactured locally,” he said, adding that steel products are also being exported.

There are about 40 active manufacturers, who altogether have the capacity to manufacture nine million tonnes a year. Of them, Abul Khair Steel, BSRM and KSRM meet more than half the demand.

And yet the industry has plenty of room to grow more.

At present, Bangladesh’s steel consumption is significantly lower than the global average, according to the World Steel Association, the international trade body for the iron and steel industry.

Currently, the per capita consumption in Bangladesh is 45kg whereas the global average is 208kg. In India, the average is 65.2kg and in Pakistan 42kg.

Per capita steel consumption is much higher in developed countries—400 kg in South Korea, 600 kg in the USA and 1,000 kg in Japan.

It is this potential that has perhaps convinced Chinese steel giant Kunming Iron & Steel Holding Company to fork out $2.4 billion to set up a steel manufacturing plant in Bangladesh.

Meanwhile, there are some mega projects like the Rampal power plant, Kanchpur-Meghna-Gumti bridge and Karnaphuli tunnel that are being made with imported steel -- brought in duty-free to the country.

On one hand, the government is losing out on revenue, and on the other, it is giving out the signal that the local manufacturers are lagging behind their foreign counterparts, said Shahidullah, also the managing director of Metrocem Ispat.

“This is depressing, discouraging and degrading,” he added.

 

[Homo Sapiens]

@bluesky

 

[bluesky]

Currently, the per capita consumption in Bangladesh is 45kg whereas the global average is 208kg. In India, the average is 65.2kg and in Pakistan 42kg.

Per capita steel consumption is much higher in developed countries—400 kg in South Korea, 600 kg in the USA and 1,000 kg in Japan.

It is this potential that has perhaps convinced Chinese steel giant Kunming Iron & Steel Holding Company to fork out $2.4 billion to set up a steel manufacturing plant in Bangladesh.

Meanwhile, there are some mega-projects like the Rampal power plant, Kanchpur-Meghna-Gumti bridge and Karnaphuli tunnel that are being made with imported steel -- brought in duty-free to the country.

On one hand, the government is losing out on revenue, and on the other, it is giving out the signal that the local manufacturers are lagging behind their foreign counterparts, said Shahidullah, also the managing director of Metrocem Ispat.

- A 45 kg per head is low, but the consumption is increasing year after year. This is important. It is a positive sign. Japanese consumption is too high because they use steel shapes also in the buildings and all major bridges are also made of steel. Japan is prone to earthquakes.
- As far as I know, the Kanchpur-Meghna-Gumti 2nd bridge is constructed by Japan. If so, it is Japanese money. So, it is understood that they will bring in steel from their own reliable sources. Whatever may be the outer look of steel, the tensile strength of, say, a 100m long steel may not be uniform in case of BD product. It means the quality is not up to standard. Japanese companies will not use such shoddy products.
- For similar reasons as above, a Chinese company will also use a product made in China. Moreover, the Chinese would want its steel industry to survive.

More to the above, both the Japanese and Chinese companies are cautious about the schedule of delivery of steel. A delay causes delaying of a project. No serious company will allow it. Especially, the Japanese like to complete a project before the scheduled date. Anyway, for now, our local steel industry should focus on supplying local construction companies. They have little scope to complain.

By the way, can someone tell me if there is an Integrated Steel Mill in BD? I understand that the Chinese steel mills will be integrated one. A uniform quality can be maintained only if the raw material fed into the furnace/smelting shop is mixed with a requisite amount of ingredients like silicon, carbon, etc. while being smelted, and the sludges are regularly cleaned out.

 

[TopCat]

- A 45 kg per head is low, but the consumption is increasing year after year. This is important. It is a positive sign. Japanese consumption is too high because they use steel shapes also in the buildings and all major bridges are also made of steel. Japan is prone to earthquakes.
- As far as I know, the Kanchpur-Meghna-Gumti 2nd bridge is constructed by Japan. If so, it is Japanese money. So, it is understood that they will bring in steel from their own reliable sources. Whatever may be the outer look of steel, the tensile strength of, say, a 100m long steel may not be uniform in case of BD product. It means the quality is not up to standard. Japanese companies will not use such shoddy products.
- For similar reasons as above, a Chinese company will also use a product made in China. Moreover, the Chinese would want its steel industry to survive.

More to the above, both the Japanese and Chinese companies are cautious about the schedule of delivery of steel. A delay causes delaying of a project. No serious company will allow it. Especially, the Japanese like to complete a project before the scheduled date. Anyway, for now, our local steel industry should focus on supplying local construction companies. They have little scope to complain.

By the way, can someone tell me if there is an Integrated Steel Mill in BD? I understand that the Chinese steel mills will be integrated one. A uniform quality can be maintained only if the raw material fed into the furnace/smelting shop is mixed with a requisite amount of ingredients like silicon, carbon, etc. while being smelted, and the sludges are regularly cleaned out.

Steel rods are not imported. all are local and they are of great quality these days. Good to see we are catching up with India

 

[Nilgiri]

Steel rods are not imported. all are local and they are of great quality these days. Good to see we are catching up with India

Nope. That's just BD internal nonsense stats that is latched on by your failed BAL STRONK media.

World Steel Association does not even mention Bangladesh. Its actual consumption by world standards is too insignificant to report:

https://www.worldsteel.org/en/dam/j...-996201185b12/World+Steel+in+Figures+2018.pdf

Plus there is no real vetted 3rd party stats for BD consumption level history either.

Actually lets see if you have even internal one produced by BAL govt over say last 5 years?

India steel consumption is going to pass 100 million tons this year. That is about 75 kg per capita...increasing from 65 in 2017. That pace is well above BD, even with BD lower base. BD will be stuck in the below 50 kg range for quite some time.....you just do not have industrial demand.....look at your automobile industry for example lol.

Hopefully from 2025 onwards, BD starts making the list on WSA figures to begin with.

 

[Bilal9]

Aisha gesey Bharater safai gawar telapoka.

Elite Iron & Steel Ind. Ltd. in Gajipur a unit of Elite Group of Industries was formed in 1987 as the first integrated steel plant in Bangladesh. The company has installed Electric Induction Furnace in 1987 and Re-Rolling Mills in 1996.

These days BSRM, GPH Ispat and PHP steel in Chittagong are three of the largest integrated steel plants in Bangladesh, producing both billet and rebar. There are numerous smaller ones as well.

The BS comment that Bangladeshi steel cannot hold uniform standards is just hogwash.

Every company tries to uphold better standards to uphold their reputation. This has nothing to do with which country rebars are made in, but the reputation of the company itself.

Usually larger companies will have more uniform products, given they have standardized quality assurance processes. In Bangladesh those three aforementioned companies have excellent uniformity in their products and they export worldwide as a result.

 

[UKBengali]

Nope. That's just BD internal nonsense stats that is latched on by your failed BAL STRONK media.

World Steel Association does not even mention Bangladesh. Its actual consumption by world standards is too insignificant to report:

https://www.worldsteel.org/en/dam/j...-996201185b12/World+Steel+in+Figures+2018.pdf

Plus there is no real vetted 3rd party stats for BD consumption level history either.

Actually lets see if you have even internal one produced by BAL govt over say last 5 years?

India steel consumption is going to pass 100 million tons this year. That is about 75 kg per capita...increasing from 65 in 2017. That pace is well above BD, even with BD lower base. BD will be stuck in the below 50 kg range for quite some time.....you just do not have industrial demand.....look at your automobile industry for example lol.

Hopefully from 2025 onwards, BD starts making the list on WSA figures to begin with.

Not exactly wholly true.
Mega projects, including metro rail will require a lot of steel.
BD may not reach India's level of consumption for some time but it can only narrow the gap with time.

 

[bluesky]

Steel rods are not imported. all are local and they are of great quality these days. Good to see we are catching up with India

Thanks for the input. However, it is too early to claim the quality of BD steel products is great. As far as I have seen some of the deformed bars (rods) in Bangladesh, they are not uniformly round, it is almost parabolic. I am not sure about the strengths like bending or tensile strength of the bars.

Bangladesh has almost no laws for standardizations and if there are some, they are not followed by the producers. However, if you are so sure about the uniformity, you can ask the producers to apply for Certification by the "International Standard Organization (ISO)". ISO certifications require all the products starting from the Smelting shop to the round bar, angle, pipe, and other shapes to compile its codes.

For examples:
- ISO 1035-1:1980
Hot-rolled steel bars -- Part 1: Dimensions of round bars
- ISO 722:1991:
Rock drilling equipment -- Hollow drill steels in bar form, hexagonal and round
- ISO 1035-2:1980
Hot-rolled steel bars -- Part 2: Dimensions of square bars
- ISO 1035-3:1980
Hot-rolled steel bars -- Part 3: Dimensions of flat bars
- ISO 1035-4:1982
Hot-rolled steel bars -- Part 4: Tolerances
- ISO 4951-1:2001
High yield strength steel bars and sections -- Part 1: General delivery requirements

There are tens of such certifications by the ISO. The companies should go after these and claim good quality which may be very difficult for the not so serious people in the country.

 

[Nilgiri]

Not exactly wholly true.
Mega projects, including metro rail will require a lot of steel.
BD may not reach India's level of consumption for some time but it can only narrow the gap with time.

Needs like a decade more for both countries (to judge this), we are both really low and at crucial inflection point overall that will be determining the sustained pace of the largest accumulations as economies mature.

 

[Bilal9]

 

[UKBengali]

Needs like a decade more for both countries (to judge this), we are both really low and at crucial inflection point overall that will be determining the sustained pace of the largest accumulations as economies mature.

Do you know what percentage of GDP India devoted to infrastructure? BD is at 6%

 

[TopCat]

Not exactly wholly true.
Mega projects, including metro rail will require a lot of steel.
BD may not reach India's level of consumption for some time but it can only narrow the gap with time.

Did you see the growth rate? Lets target for Vietnam by 2030.

 

[UKBengali]

Did you see the growth rate? Lets target for Vietnam by 2030.

India and Vietnam have one big advantage over BD - they both produce lots of cars that are built with steel.
BD is rightly discouraging car use which means that no large factories are built in BD.

 

[Nilgiri]

Do you know what percentage of GDP India devoted to infrastructure? BD is at 6%

Knock yourself out (realised stuff up till 2016):

https://outlook.gihub.org/countries/India

Can check for BD too, you will notice that both are in inflection point zone (2015 - 2016) so I would not take the long term trend stuff that seriously...and hence why some years till 2025 etc at least need to elapse first.

Another source with another standard (and I dunno which one it is for 6% you quote for BD) will say 9% of GDP for India (construction based infra total):

https://www.statista.com/statistics...-construction-infrastructure-spending-in-gdp/

GCF (gross capital formation) can also be thought of as broad total infra investment in a year. Issue is in GCF, not everything is equal level of intensity and return etc....so the sector investment stuff by name like in the G20 infra outlook might be best place to start (ignoring purchasing power for time being and using nominal exchange rate).

 

[UKBengali]

Knock yourself out (realised stuff up till 2016):

https://outlook.gihub.org/countries/India

Can check for BD too, you will notice that both are in inflection point zone (2015 - 2016) so I would not take the long term trend stuff that seriously...and hence why some years till 2025 etc at least need to elapse first.

Another source with another standard (and I dunno which one it is for 6% you quote for BD) will say 9% of GDP for India (construction based infra total):

https://www.statista.com/statistics...-construction-infrastructure-spending-in-gdp/

GCF (gross capital formation) can also be thought of as broad total infra investment in a year. Issue is in GCF, not everything is equal level of intensity and return etc....so the sector investment stuff by name like in the G20 infra outlook might be best place to start (ignoring purchasing power for time being and using nominal exchange rate).

The first data source is really good - the second you need a premium account which I do not have and so I cannot judge.

It is slightly inaccurate for 2019(which is not surprising) as BD will spend 17 billion US dollars this fiscal on infrastructure, hence why I said 6% of GDP, where the data says 13 billion US dollars.
If things keep carrying on this way, imagine an epic S Asian road and rail trip in the 2030s.