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Small steel mills suffer for political turmoil

Sajjadur Rahman
Non-graded traditional steel millers are facing a difficult time as they are losing market share to tech-sawy large mills, while their remaining business is being eaten up by the ongoing political unrest, industry insiders said.
There are around 400 small mills that produce non-graded rod and other steel products, according to Bangladesh ReRolling Mills Association (BRMA).
Of these mills, almost half are temporarily closed while the rest are running below capacity.
"Most of our mills are running at less than 50 percent of capacity because of the strikes and blockade, unsecured transportation and rising costs," said Sirajul Islam, vice president of BRMA.
In addition to a significant fall in sales, raw material carrying costs have now more than doubled, compared to two months ago.
A truck to carry raw materials (scrap) from Chittagong Port to Narayanganj now charges more than Tk 30,000, up from Tk 14,000-Tk 15,000 before the strikes and blockade began on January 6.
The mills supply steel materials for buildings, bridges, railways and the light engineering sector including the manufacturers of bicycles and auto parts. The mills under BRMA produce rods, billets and angles that have no grade like those of BSRM, Abul Khair Steel or RS RM.
Non-graded rods are made from scrap of the ship-breaking industry based on the scrap plates and open cast ingots for which there is no mill certificate or test result.
According to market players, Bangladesh presently has an annual demand for 40 lakh tonnes of rod, 65 percent of which is met by the graded millers, such as BSRM, Abul Khair Steel, RSRM, and GPH Ispat. The rest
35 percent is supplied by the non-graded mills that run manually or semi-automatically. Just two decades ago, nongraded mills used to meet a majority of the country's demand for steel.
'Non-graded millers held 50 percent of the market share three years ago. Now it has dropped to 35 percent," said a senior official of GPH Ispat.
He attributed this fall in the market share to consumer awareness and sensitivity to the quality of rod.
“The market share of the non-graded mills will go down further in the next 5-10 years, as the big millers expand capacity.’
The ongoing strikes and blockade over the last 50 days have doubled woes for these small millers.
"We are on the verge of collapse. We cannot bring in inputs to our factories for production," said Abu Bakar Siddique, general secretary of BRMA and executive director of Al-Arafat Steel Mills that makes non-graded rod.
Siddique said there are around 400 re-rolling steel mills across the country though only 150 are BRMA members.
Shakhawat Hossain, owner of Al-Baraka Steel that has a capacity to produce 70-80 tonnes of rod a day during normal times, said his mill's production has been slashed by a half.
"What will we do with these products if people do not come to buy those?" Hossain questioned.
He said an inadequate supply of gas is also affecting steel production in many mills in the Fatullah area.