Export potential of mild steel products yet unexploited
The steel manufacturer raked in $50 million from the export in the six months till May
In November 2020, GPH Ispat, a leading steelmaker in Bangladesh, exported mild steel billets to China. It was the first such export in the country's history.
The steel manufacturer raked in $50 million from the export in the six months till May.
GPH Ispat, which manufactures mild steel products using the latest Quantum Electric Arc Furnace technology in its plant as the first Asian company, now sees prospects of exporting billets to the United States and Europe in the future.
It goes without saying that there are no heavy industrial products like MS products in the country's export basket. Bangladesh started exporting heavy industrial products in 2007 through the shipbuilding sector. Initially, the heavy industry showed enormous potential, but later this sector's growth stopped and companies turned loan defaulters.
In the last 13 years, the sector could fetch only $120 million but in deemed exports.Deemed exports refer to those transactions in which the goods supplied do not leave the country.
Kamrul Islam, executive director (finance) of GPH Ispat, told The Business Standard that another $15 million worth of MS products will be exported in the remaining period of the current fiscal year. With the government's support, it will be possible to export such products, amounting to $250 million per annum in the coming years.
"We are losing competitiveness in the global market as they have to pay two-time freight charges – one for raw material imports and another for exports. They also have to spend on creating openings with the global market, not having much familiarity with Bangladesh products," he added.
In this situation, GPH Ispat has sought a 15% cash assistance from the government against the MS product exports to exploit the export potential.
About 60-70% of raw materials of steel products are imported, while the rest is collected locally.
According to the Export Promotion Bureau (EPB), MS products were exported from Bangladesh before, but in very small quantities. In the last six months, GPH Ispat alone has exported more than what Bangladesh has earned by exporting MS products in the last four years.
GPH Ispat manufactures construction steel with the world's purest and cleanest quantum technology, which is in great demand in the international market.
According to the EPB, Bangladesh raked in $0.95 million through exports of MS products in FY17, which increased to $10.17 million the following year. After a further rise in exports to $11.39 million in FY19, it declined again to $0.82 million in FY20 because of the pandemic.
Kamrul said the foreign currencies that Bangladesh earned were mainly through deemed exports of MS products to foreign investors inside the country. In other words, 100% of foreign-owned companies in the economic zones and export processing zones bought these products. Only GPH Ispat's products are earning foreign exchange by going beyond Bangladesh borders.
Steel industry officials say there are 210 small and large mills producing MS products in Bangladesh. Of them, 42 companies produce billets from scrap and MS rods from billets, while 63 manufacture ingots and produce 40-grade rods. Others are producing rods, angles and bars by directly using steel plates removed from ships.
The demand for MS products in Bangladesh is six million tonnes per year. On the other hand, the annual local production capacity of such products is 8.5 million tonnes. So, even after meeting local demand, there is an opportunity to export 2.5 million tonnes annually.
MA Malek, a consultant at GPH Ispat, wrote a letter to senior Finance Secretary Abdur Rauf Talukder on 28 April, seeking a 15% cash incentive on MS products, citing the fact that several local manufacturers, including GPH Ispat, had got orders to export billets to China.
"This cash support is needed to expand the export market, which will help them ensure a proper use of their production capacity. It will also be possible to reduce production costs," he wrote in the letter.
According to finance ministry officials, the Bangladesh Trade and Tariff Commission had recommended that the commerce ministry provide 15% cash assistance against the MS product export immediately after the first shipment was sent to China in November last year. Later, the commerce ministry forwarded it to the finance ministry, but the Finance Division did not give any decision.
Officials at GPH Ispat said the technology they use makes it possible to produce 900-grade steel products. They are now producing 500-550 grade steel as per demand of ongoing mega projects in the country. This steel is being used in various projects, including the third terminal of Shahjalal International Airport, the Matarbari power plant and Payra deep seaport.
Launched in 2006, GPH Ispat is a public company listed on the Dhaka and Chattogram Stock Exchanges.
