High raw material cost knocks 70% of Ctg steel factories out of production
20,000 workers have been rendered unemployed
About 70% of steel mills in Chattogram have gone out of production owing to an abnormal increase in costs of scrap steel both in local and international markets.
It has made around 20,000 workers unemployed.
The companies still have to count losses as other costs, such as the salaries of their permanent workers, continue to be dealt with.
According to MS Rod manufacturers, per tonne melting scrap is selling for Tk54,000, plate for Tk58,000 and billet for Tk63,000 in the domestic market.
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A year ago, the prices were Tk30,000-Tk32,000, Tk35,000-Tk37,000 and Tk40,000-Tk42,000, in that order.
In the international market, scrap steel is selling for $495 or Tk44,550, which was only $270-300 or Tk24,300-Tk27,000 a year ago.
Manufacturers say the prices of melting scrap, plate and billet – raw materials for steel mills – almost doubled in the last year. However, the prices of rods could not be hiked accordingly.
The proprietor of Saleh Steels Ltd, which is out of production, said due to the increase in prices, the demand for grade 60 and grade 40 rods has decreased.
"The price of rods has now gone beyond the purchasing capacity of the lower middle class and middle class. As a result, the construction of houses by general people is now stagnant," he added. "Now rods are being traded mainly for the upper class, various institutions and government projects."
Mohammad Lokman, secretary of the Chattogram Steel Re-rolling Mills Owners Association of Bangladesh, said there are about 50 automatic (grade 75), semi-automatic (grade 60) and manual (grade 40) steel mills in Chattogram.
He said most of the closed mills are manual while some of them are semi-automatic.
Automatic factories have somehow kept their production normal even after buying raw materials at higher prices, he added.
There are about 35 automatic steel mills in the country, including BSRM, KSRM and AKS, while small and medium enterprises own semi-automatic and manual factories.
Ratanpur Steel Re-Rolling Mills (RSRM), Ehsan Re-Rolling Mills, MK Steel Builders, Peninsula Steels, Sheetal Steels and Saleh Steels Industries are among the grade 60 factories which are out of production at this moment.
Besides, Islam Steels, Asia Steels and Baizid Steels have somehow kept their production running.
Among the grade 40 rod manufacturers which have been out of production for a long time are Manti Steel, SL Steel, Rising Steels, Brothers Steel Industries, Bhatiari Steels, Ambia Steels, Hillview Steels, Super Steels, Nazia Steels, Shafiul Alam Steels, Majid Steels, Dinar Steels and MT Steels.
According to the owners' association, if all the factories were operational, about 30-32 lakh tonnes of MS rods would be produced in Chattogram every day. As about 70% of the factories are closed, the production of rods now is only 15-20 lakh tonnes per day.
"Many companies have been forced to stop production as they have not been able to find buyers for rods at higher prices," said Abu Syeed Chowdhury, proprietor of Baizid Steels Ltd. "Some companies have somehow maintained production and are continuing to pay their workers."
M Manjur Alam, president of the association, said the rise in raw material prices in the international market has had a serious impact on steel manufacturers in the domestic market.
"This is because the price cannot be adjusted in proportion to the cost of production of general grade rods. As a result, manufacturers are being forced to sell products at a price lower than the production costs," he added.
The grade 75 rods of various brands are selling for Tk76,000-Tk80,000, grade 60 rods for Tk69,000-Tk70,000 and grade 40 rods for Tk65,000-66,000 per tonne.
A year ago, the prices were Tk51,000-Tk54,000, Tk43,000-Tk44,000 and Tk38,000-Tk40,000, respectively.
