Steelmakers facing cocktails of challenges | The Daily Star
12:00 AM, April 07, 2020 / LAST MODIFIED: 12:54 AM, April 07, 2020

Steelmakers facing cocktails of challenges

Steel manufacturers are bracing for massive losses as the coronavirus pandemic has disrupted the import of raw materials and production -- a development that will also deal a blow to real estate and infrastructure projects.

As much as 90 per cent of the raw materials are imported from the US, Canada, Italy, the UK and Australia, which have gone into partial or full lockdown since the beginning of March to contain the spread of the highly contagious and deadly pathogen.

And the lockdown in the countries are unlikely to be lifted anytime soon given the breathtaking pace at which the novel virus is infecting people there and claiming lives.

In the first two weeks of March, the steelmakers' losses amounted to Tk 350 crore, said Manwar Hossain, president of Bangladesh Steel Mills Owners Association.

If the situation goes on like this for the next four months, the losses will run north of Tk 4,000 crore, said Hossain, also the managing director of Anwar Group of Industries that owns Anwar Ispat.

Not only raw materials, steel manufacturers are unable to bring in spare parts or capital machinery for the near standstill of economic activities around the world, he said, adding that about eight million empty containers are now stranded in the Chinese ports alone.

To tide them over during this trying period, steelmakers are demanding some policy support -- but not funds from the government.

Banks can extend the tenure of payment for letters of credit by an additional six months without the need for taking prior permission from the central bank, Hossain said, while calling for a fund for short-term loans against LCs.

The steel industry is now worth Tk 50,000 crore, according to the sector people.

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

The country has about 40 active manufacturers, who altogether have the capacity to manufacture nine million tonnes of steel a year. Of them, Abul Khair Steel, GPH Steel, BSRM and KSRM meet more than half the annual demand for about eight million tonnes.

"We have been left in a pickle as the pandemic has broken the supply chain of all the countries from where we source our raw materials," said Shahidullah, also the managing director of Metrocem Steel.

Though the steel industry is not export-oriented, the government should give it the same importance as the garment sector, he said, adding that the present situation may also affect Bangladesh's real estate sector.

Sales of steel products declined during the last two months because of a slowdown in construction works for some of the big infrastructure projects of the government, while private consumption also went down significantly, Shahidullah added.

The impact of production disruption in the steel industry will not be felt straightaway for the Padma bridge and Karnaphuli river tunnel projects, which have a stock of construction materials, said Jamilur Reza Choudhury, a renowned civil engineer and a former teacher of Bangladesh University of Engineering and Technology.

But the works of other projects like the Dhaka-Chattogram elevated expressway will be hampered.

"Against the backdrop, the overall implementation of the infrastructure projects may slow down for the time being," said Choudhury, also a consultant of the government's major infrastructure projects.

The government's infrastructure projects account for 35-40 per cent of the total steel consumption in Bangladesh, up from 15 per cent a decade ago, according to Shahidullah.

The fate of at least 8,000 workers in Chattogram-based PHP Family's steel mill is hanging by a thread as the factory has been closed due to the lockdown, said Dilshad Ahmed, head of media and public relations of PHP Family that owns the PHP Arabian Horse Super brand.

"Production as well as sales has flatlined," he added.

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