Bangladesh Steels Re-Rolling Mills Ltd. (BSRM) has grown well beyond its steel rolling roots, having steadily increased its melt shop capacity to make more of the ingots it feeds to its steel rolling machinery.
The company’s investments in increased induction furnace and electric arc furnace (EAF) steelmaking technology provide one of the reasons Bangladesh has become a growing destination for ferrous scrap shipped from North America and other parts of the world.
An interview that was edited for clarity was conducted by Raipur, India-based SteelMint on behalf of Recycling Today with BSRM Managing Director Aameir Alihussain. It provides more insight into the evolution of BSRM and where its managing director sees the firm heading.
SteelMint/Recycling Today (SM/RT): How many scrap melting facilities do you have, and what is the purpose of each? How many employees do you have?
Aameir Alihussain (AA): BSRM has started its first melting facility in 1996. After that, we have set up additional capacity and facilities based on the country’s growing demand and to date we have around 5,000 employees. Now we have four melting facilities in different locations to meet our billet requirements at the rolling mills. The steel industry [in Bangladesh] has been in a growth rate of 8 percent, with ongoing and upcoming large infrastructure projects on hand. As the market share leader, BSRM strives to maintain that leadership over the years. We do so with innovative product solutions and with assurances of quality from scrap selection to final production, we strive to maintain our high quality standards. It is also very important to mention that Bangladesh is a growing economy, and to comply with the industry, growth is inevitable. Bangladesh has been growing between 6 to 8 percent every year for around 15 years, and therefore the industry has also grown along with the economy.
SM/RT: What materials or scrap grades do you purchase?
AA: Bangladesh being a developing country, we have to depend on imported scrap. We are buying almost all the grades of scrap, like heavy melting steel (HMS), shredded, plate and structural, busheling, etc. Beside scrap, we also buy direct reduced iron (DRI). Bangladesh is currently in the least-developed economy range, but in the next four years or so will graduate to a developing country. Scrap generation is also expected to increase with the growth of the economy. Bangladesh is also the largest player in the world in ship recycling, so there is scrap generated from there, which the local steel industry procures.
SM/RT: What is the approximate volume of scrap material you consume each year? How much of it is imported?
AA: Every year we are importing 1.4 million tons of scrap. We also buy local scrap, depending on the market situation, and every year around 300,000 tons are generated from just the ship recycling industry. Additionally, other local scrap is generated with various economic activities, which is available for the steel industry to source.
SM/RT: Are there any policy issues or market conditions you see on the horizon at the national or global level that could affect your business?
AA: At the local level, there are only taxation issues, which are a bit complicated, with tax at source deductions when procuring scrap instead of a clear input-output system of VAT (value-added tax), which is prevalent in other industries. This, however, has helped the steel industry in controlling costs—and therefore prices—at the customer level. The steel industry is on tariff-based VAT and not 15 percent VAT prevalent in most other industries, which is quite high for an industry like steel where you are trading high values. The upcoming budget in June may resolve a number of issues related with the taxation system, and the government is committed to improve the ease of doing business, especially related with simplicity in taxation.
Beside local issues, we are watching carefully the international scrap movement scenario during the post-COVID situation. Due to higher growth plans in China, they have opened up the import of scrap again. If China starts buying scrap from the global market heavily, we feel there will be huge pressure on price, and the availability of scrap will come down in the Asian market. Protectionism by some countries in restricting export of scrap, which will not help the global industry. Any such measures time and again have proven to be counterproductive and affects the source country’s industry in motivating them to be more efficient. This, therefore, causes a loss to taxpayer money and national economy. Encouraging trade is the way forward to propel economies, and we hope such protectionism will be removed in future.
SM/RT: What are some innovations your company has pioneered? What sets you apart?
AA: BSRM has been the brand for quality products with continuous research and development to ensure innovative construction solutions and services to customers. The innovation journey started from the 1990s by introducing Torsteel [and architectural structural steel] in our country and gradually introducing 60-graded deformed bar, TMT500W CWR and TMT 500W DWR [types of bar steel]. We have introduced epoxy-coated bar for construction in saltwater areas. Very recently we have introduced the country’s first construction solutions and service center, the FastBuild Service, for large projects as well as individual house builders. This will ensure standards and compliance and customizes construction solutions, and above all ensures on-time delivery. We are continuously developing new products and ideas for better customer satisfaction and want to introduce the latest standards and systems in the country. We have also introduced the concept of branding in Bangladesh. It’s a unique case that is followed by the industry to do branding, as well having our own distribution network of retailers across the country. We are our own distributor with presence across the country, which is quite unique from the world perspective.
We are also the world’s largest producer of steel through the electric induction furnace and electric arc ladle furnace (EAF) routes and have pioneered this method of steel production in this large of a scale, producing international standard quality products. All our around 1.6 million tons of long products are produced by the induction route, which is quite unique, and our quality can be compared to any country in the world.
SM/RT: What is your company’s business philosophy? (What do you think it takes to be successful in the metals production business?)
AA: BSRM maintains its leadership by ensuring and continuously producing the best quality steel products and focusing on the future need of the market. Understanding the process and dynamics of the steel industry is important. There are different ways of producing steel, and each process has its own advantages and disadvantages, and each process is cost-effective in different locations in the world. So, there is no best way of steelmaking as per our philosophy. This knowledge of steelmaking costs and quality requirements has led us to become the world's largest producer in the process we follow, which is also the most cost-effective way of producing steel in Bangladesh currently.
BSRM does not just sell steel, rather the company is in a process of building the nation through innovation, standing beside community development and maintaining commitments. Sustainable growth, quality, reliability, trust, leadership, social responsibility and customer satisfaction are the values that drive our business philosophy. The core of success in the metal production business are quality, research and customer-centric service.
SM/RT: Where do you go from here? Are you planning any future innovations, expansions or upgrades?
AA: We are continuously trying to develop new innovations in terms of quality, productivity and customer satisfaction. We believe that our customers will help us to grow further. We are committed to expanding in a greenfield project that will be commissioned about two years from now, which will be our third rolling mill backed by increasing capacity in our existing melt shops to support the billet requirements. Additionally, we are regularly upgrading our existing capacities. So, overall, in about two years’ time, our capacity will become more than 2 million tons with minimal investment, which is our big advantage as we already have infrastructure in place. We have the flexibility of adding more capacity beyond this. We will keep upgrading as and when we feel the necessity based on the overall market conditions.
BSRM believes in making the construction process easy for the customers by providing a one-stop solution to its customers in the course of time. As steel bar management is not easy for our customers, we intend to make it within the comfort zone of our customers by considering time, quality and government rules and regulations.
SM/RT: What is your outlook for Bangladesh's domestic steel demand?
AA: Due to the COVID pandemic, we could not achieve our projected growth in the last year. Not only us, but the entire industry faced a hurdle in market growth. Putting the situation aside, we feel that we have done well during last 10 years, with consistent growth in comparison to market growth. Consistent GDP (gross domestic product) growth leads to continuous growth in the construction sector. The government has initiated new projects and steel demand is also rising at the same pace. We are expecting development work in our country will continue, and steel demand will also increase continuously for upcoming years. The economic outlook for Bangladesh is positive, with high foreign exchange reserves, growth in tax collection, a good agricultural base, growing exports (especially in the garment sector) and growing remittances from Bangladeshis working abroad. The social indicators for Bangladesh are amongst the best in South Asia: Education is improving, there is a huge young population, and government is making appropriate decisions to keep the economy vibrant with better policies every year. All these variables lead to a positive outlook for the country.
SM/RT: What are your views on global scrap prices in the short to medium term?
AA: The scrap market is totally uncertain this year. The availability of scrap is less due to the COVID situation in developed countries. Moreover, demand for steel in every country has increased due to injections of stimulus packages declared by most countries. This demand is going to continue for another couple of years, probably until the situation normalizes. The freight market, however, needs to cool down, as current rates are becoming unsustainable. It will take some time for the freight market to stabilize, as the effect of the pandemic is still there. What was lost last year is being covered now and, due to changes in consumer habits, the demand for containers has also gone up. We have to wait for the pandemic to come under control globally for stability and normality to return, and we don’t see that happening this year. So, scrap and freight are expected to remain at current higher levels this year.
Brian Taylor is senior editor for the Recycling Today Media Group and can be contacted at email@example.com. More information about India-based metals information service provider SteelMint can be found on this web page.