Steelmakers have gone through a difficult year for several reasons, including increased import costs, port congestion, lack of gas supply and restriction of transportation goods by 20 ton vehicles on motorways.
The sector has grown about 15% from one year to the next in 2017, said Manwar Hossain, president of the Association of Recycling Plants and Oil & Gas. Bangladesh steel mill (BARSMA).
The association represents large sawmills, which have steadily increased production to meet the growing demand for public and private sector construction.
National steel production, which stagnated between 25 and 30 million tons per year between 2008 and 2014, has increased in recent years, causing millers to increase their production capacity and opt for a upstream integration.
With about 70 million tons of capacity, steel mills produced between 50 and 55 million tons of steel in 2017, compared with 40-45 tons per ton a year ago, said SK Masadul Alam Masud , former president of BARSMA.
Hossain, also managing director of Anwar Ispat, said the government's construction activities were the main driver of growth.
"We increased capacity, but we could not bring production to the expected level because of insufficient gas and electricity supplies," he said.
Nervousness seized the sector following the government's announcement to implement the new law on VAT that aimed to apply a 15% VAT from the fiscal year 2017-18 instead of the reduced rate that she paid at that time.
Operators feared that the imposition of a 15% VAT would result in higher prices for bar and steel products and subsequently reduce the demand for steel products.
The government subsequently postponed its implementation plan until 2019, which allowed the steel companies to relieve themselves.
Masud said that the government should not apply the law on VAT because the sector would suffer from the application of a uniform VAT.
Meanwhile, millers struggled to move goods after the Ministry of the Road, Transportation and Bridges tightened rules on the transfer of goods by vehicles.
In November, the ministry imposed rules that a 40-foot trailer should be used to transport 40-tonne cargoes on roads.
The sudden imposition of the decision put an end to the transportation of raw materials from the port of Chittagong, as larger vehicles are needed, Hossain said.
"The iron and steel industry will need 65,000 trailers of this type to transport the goods," he added.
As the supply of such trailers was lower than the demand, transportation costs also increased, said the millers
"We were unable to release any of the properties for 17 days, and the government should have assessed the availability of such trailers and the quantity of goods imported into the country," said Mr. Hossain
Congestion at Chittagong Harbor also affected the area. "Our costs have increased," he added.
Aameir Alihussain, managing director of BSRM, one of the country's largest steelmakers, said the steel industry was under pressure in 2017. The steel sector is not developed as planned this year, he said. growth for 2017.
Masud said that the production cost of factories has increased this year due to the increase in prices of electricity, gas and the appreciation of the US dollar.
However, the industry has made some progress in 2017, one of them being that it has become almost self-sufficient in billets, the main raw material for cane.
"Those who had plans for expansion could end," said Alihussain, while citing the increase in efficiency of the sector as another achievement.
For example, cane prices are now lower than in China and India, according to the head of BSRM.
However, none of the three mentioned an improvement in the ease of doing business during the outgoing year.
"Rather than becoming easier, doing business has become a bit difficult in 2017," said Hossain.
Alihussain complained that the processes have become much too centralized. "Each file must be sent to Dhaka for decision, which is a problem for those doing business outside of Dhaka."
Measures should be taken to facilitate the movement of goods, as contractors have to pay more for freight and pay fines for delays in clearing goods from the port, he said.
"There is a huge lack of coordination, and efficiency will increase by 5 to 10 percent if the government makes decisions in coordination with all stakeholders, let people participate," Hossain said.
Millers said the steel market will grow in 2018 due to government spending on infrastructure development before the elections.
Alihussain said the government should make decisions in advance so that development activities continue during the election period.
"But political unrest could be a problematic factor, it would be the biggest challenge for us.All parties should make efforts to ensure that such a situation does not occur and does not affect them. business, "said Masud.
Hossain said that political instability will affect everyone. "Everyone is concerned about it."