BSRM to ramp up steel capacity to over 2 mn t in two-years' time

The Bangladesh Steel Re-Rolling Mills Ltd., (BSRM,) is based in Chittagong. It is the largest construction steel manufacturer company in Bangladesh and maintains its leadership position by focusing on quality and customer satisfaction. With the Bangladesh economy hitting the right notes, the company is optimistic of growing at above 8% annually.

Excerpts of interview by SteelMint and Recycling Today with Mr. Aameir Alihussain, MD, BSRM :

Q1. How many scrap-melting facilities do you have and what is the purpose of each? How many employees do you have?

BSRM started its 1st melting facility way back in 1996. After that we have set up additional capacity and facilities based on countries growing demand. To date, we have around 5,000 employees. We have four melting facilities in different locations to meet our Billet requirement in Rolling mills. We have maintained a steady growth rate of 8%. To maintain the leadership with its innovative product solutions with assurance 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 since last 15 years and we too have grown along with the economy.

Q2. What materials or scrap grades do you purchase?

Being a developing country, we have to depend on imported scraps. We are buying almost all the grades of scraps like HMS, Shredded, PNS, and Busheling etc. Beside scraps, we also buy DRI. Bangladesh is currently in the Least Developed Economy range and 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.

Q3. What is the approximate volume of scrap material you consume each year? How much of it is imported?

Every year we are importing 1.4 mn t of scrap. We buy local scrap depending on the market situation. Every year around 300,000 tons is generated from the ship recycling industry. Additionally, there is other local scrap generated as well with various economic activities which is available for the steel industry to source.

Q4. Are there any policy issues or market conditions you see on the horizon at the national or global level that could affect your business?

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 which is prevalent in other industries. This however has helped the steel industry in controlling costs. Steel industry is on tariff based VAT and not 15% VAT prevalent in most other industries which is quite high for an industry like steel where you 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 post Covid situation. Due to higher growth plan in China, they have opened up import of scrap again. If China starts buying scrap from global market heavily, we feel there will be huge pressure on price. Availability of scrap will come down in Asian market. Protectionism by some countries in restricting export of scraps will not help global industry. Any such measure time and again has proven to be counterproductive and affects the source country's industry in motivating them to be more efficient and therefore causing a loss to tax payer money and national economy. Encouraging trade is the way forward to propel economies and we hope such protectionism will be removed in future.

Q5. What are some innovations your company has pioneered? What sets you apart?

BSRM has been the brand for Quality Products with continuous Research & Development to ensure innovative construction solutions and services to the customers. The innovation journey started from the 90s, when we introduced torsteel in our country. Over the years we gradually introduced 60graded deformed bar, TMT500W CWR and TMT 500W DWR. We have introduced Epoxy Coated Bar for construction in saline area.

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, compliance, customized construction solutions and above all on-time delivery.

We have also introduced the concept of branding in Bangladesh and it's a unique case which is followed by the industry to do branding as well having its own distribution network of retailers across the country. We are our own distributors with presence across the country which is quite unique from the world perspective.

We are also the world's largest producer of steel through Electric Induction furnace and Electric Arc Ladle furnace route and have pioneered this method of steel production in such a large scale while adhering to international standards of quality. All of our 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.

Q6. What is your company's business philosophy? (What do you think it takes to be successful in the metals production business?)

BSRM maintains its leadership by ensuring and continuously producing the best quality steel products, focusing on the futuristic need of the market. Understanding 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 steel making as per our philosophy. This knowledge of steel making costs and quality requirements has led us to become the world 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 our values that drive our business philosophy. The core of success in metal production business are - quality, research and customer centric service.

Q7. Where do you go from here? Are you planning any future innovations, expansions, or upgrades?

We are continuously trying to develop new benchmarks in terms of quality, productivity, and customer Satisfaction. We believe that our customer will help us to grow further. We are committed for going for expansion in a greenfield project which will be commissioned in about two years from now. It will be our 3rd rolling mill backed by increasing capacity in our existing melt shops to support the billet requirement. Additionally, we are regularly upgrading our existing capacities so overall in about two years' time, our (rolling) capacity will exceed 2 million tons with minimal investment which is our big advantage as we already have the infrastructure in place. We have the flexibility of adding more capacity beyond this which we will keep upgrading after assessing the overall market conditions. BSRM believes in making construction process easy for the customers by providing one stop solution to its customers in course of time.

Q8. What is your outlook for Bangladesh's domestic steel demand?

Due to Covid Pandemic, we could not achieve our projected growth in 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 decade with a consistent growth in comparison to market growth. Consistent GDP growth leads to continuous growth in construction sector. Government has initiated new projects and steel demand is also rising at the same pace. We are expecting that the development works in our country will continue and steel demand will also increase continuously in the coming years.

The economic outlook for Bangladesh is positive with high foreign exchange reserves, growth in tax collection, good agricultural base, growing exports especially of garment sector and growing remittances from Bangladeshis working abroad. The social indicators for Bangladesh are amongst the best in South Asia, education is improving, huge young population and the government taking appropriate decisions of keeping the economy vibrant with better policies every year. All these variables lead to a positive outlook for the country.

Q9. Your views on the global scrap prices in the short to medium term?

Scrap market is totally uncertain this year due to Covid. Moreover, demand of steel in every country has increased due to injection of stimulus package 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.

We have to wait for the pandemic to come under control globally for stability and normalcy to return and we don't see that happening this year. So scrap and freight are expected to remain at the current higher levels throughout this year.