The pandemic, it seems, was particularly harsh for steel makers, eviscerating demand for their products like never before.
Profit of all four listed steel makers tumbled in the financial year that ended on June 30.
Bangladesh announced its first confirmed cases of Covid-19 on March 8 and three weeks later, to flatten the curve on coronavirus, the government put the country on a shutdown, bringing construction activities to screeching halt.
The shutdown was lifted on May 30 but the economy did not get off to a flying start right away.
The profit of BSRM Steels, the market leader, crashed 57 per cent year-on-year in its 2019-20 financial year, BSRM’s 50.3 per cent,GPH Ispat’s 62.9 per cent and RSRM’s 81.2 per cent.
The sharp fall of profit was caused by lower sales during the April-June period, said Tapan Sengupta, deputy managing director of BSRM, which logged in profit of Tk 124.5 crore.
The Tk 55,000 crore-steel industry’s estimated loss was Tk3,000 crore between March and April, said Manwar Hossain, president of the Bangladesh Steel Mills Owners Association.
The loss is likely to reach Tk15,000 crore come December, according to Hossain, also the managing director of Anwar Group of Industries that owns Anwar Ispat.
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 Md Shahidullah, general secretary of the Bangladesh Steel Manufacturers Association.
The rest of the demand came from corporate projects and individual homebuilders.
In the current situation, all their activities are slow, said Shahidullah, also the managing director of Metrocem Steel.
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“We are facing losses due to low demand and a 15 per cent price hike for steel scraps in the global market,” Hossain said.
The world's steel scrap supply system has completely collapsed.
The sector’s raw material, which depends on summer collection, is not going to be collected this year. Traders fear it will have an impact until next June.
He also said there is a need for sustaining existing value-added tax based on the tariff rates.
If the tariff is revoked and a new VAT rate is imposed, the price of steel rod will increase by Tk 9,000 per tonne putting pressure on the buyers, Hossain said.
To tide over the tough time, Kamrul Islam, director of finance at GPH Ispat, which logged in profit of Tk 29.9 crore in its last financial year,called for rationalisation of taxes, duties and VAT.
“High tax and duty might destroy any industry during the crisis.”
He called for cancellation of the 5 per cent advance tax on the import of raw materials as well as VAT at source.
Bangladesh’s steel market has witnessed 10-15 per cent growth per annum, leading to a total demand of 7.5 million tonne.
There are about 40 active factories, where investment amounting to Tk 50,000 crore is tied up and 3 lakhare employed.
