Bangladesh鈥檚 steel industry, one of the key drivers of the country鈥檚 infrastructure-led economic growth is shifting its focus from capacity expansion to cost efficiency and technological modernisation as domestic demand has weakened in recent years due to prolonged political and economic uncertainty.
Over the past 15 years, the sector has grown steadily, driven by both public and private investment in infrastructure.
However, after recovering from the Covid-19 shock, the market was again been hit by a sharp fall in demand for construction materials amid a slowdown in development activities.
Companies are now investing in modernising existing facilities and increasing production efficiency through automation and technological upgrades.
By improving productivity with the same workforce and within the same operational time frame, large producers are cutting unit costs, allowing them to sell at lower prices while staying competitive.
According to data from leading steel industry insiders, the annual production capacity of the country鈥檚 automatic and semi-automatic rebar manufacturers exceeded 10 million tonnes.
But actual demand has dropped to about 5.5-6 million tonnes, which is only about 60 per cent of capacity.
Manufacturers and sector professionals stated that due to stagnation in both government and private construction, rod prices had fallen to their lowest levels聽in recent times.聽
Market operators said that demand was already 25-35 per cent below installed capacity before the slowdown and was now down by as much as 40 per cent compared with that in the previous years.聽
The prices of rods also fell sharply in recent months.聽According to data from Trading Corporation of Bangladesh, on Friday, the price of 60-grade MS rods, widely used on construction sites and in infrastructure projects, was Tk 81,000-84,000 per tonne, the lowest in the last four years. The price of 40-grade MS rod was Tk 74,000-77,000 per tonne.聽 In 2021, the price of 60-grade MS rods went below Tk 80,000 per tonne to Tk 76,000, mostly due to Covid-19 related sluggishness, which surged to Tk 93,000 in October 2022, Tk 99,000-105,000 in October 2023, and Tk 89,000 per tonne in October 2024.聽
A rebound is expected once political stability returns, as construction activities resume and private investment confidence improves.
Md Abul Kalam, director of Bikrampur Auto Re-Rolling Mills Limited, said that, as government projects and private construction slowed, demand for rods also decreased.
鈥榃hen the political stability arrives, construction聽activities would also normalise and the prices would also rise,鈥� he added.
The construction boom driven by several mega infrastructure projects had once pushed demand for rebar to record levels. But most of the government鈥檚 mega projects were completed by 2023-24 financial year, while the remaining ones are progressing slowly.
The interim government, in power for the past 15 months, has not approved any new mega projects.
Despite higher global scrap prices, local rebar prices have been falling due to subdued demand.
Market data show that prices for high-quality 75-grade rebar have come down to Tk 80,000 to 82,000 per tonne on the wholesale market, while 60-grade rebar is trading at Tk 72,000 to 74,000.
Retail prices are about Tk 500 to 1,000 higher, depending on brand and region.
Industry officials聽said that many small manual re-rolling mills had shut down or cut production by up to 80 per cent as they struggled to compete with larger automated producers offering lower prices.
When asked, Md Jasim Uddin, director (sales and marketing) of KSRM Group, one of Chattogram鈥檚 leading rebar producers, said that demand for steel products had been weak for a long time.
鈥榃e are just trying to survive by keeping production going somehow. The plant, which has a monthly production capacity of 90,000 tonnes, is now operating far below that level,鈥� he added.
He said that implementing infrastructure development projects was essential for any government to create employment and ensure economic progress.
聽鈥楢fter the upcoming national election, once a political government assumes power, the pace of work on mega projects might increase,鈥� he added.
Industry people said that once a newly elected government assumed power and resumed infrastructure projects, including the Dhaka-Chattogram highway expansion, the Chattogram-Cox Bazar Marine Drive, and the remaining metro rail lines, steel demand would rebound sharply.
Producers are therefore strengthening internal capabilities instead of laying off workers or building new plants that take years to complete, they said.
According to the Bangladesh Steel Mills Association, production of MS rods has declined by 30-35 per cent in recent times.
BSMA vice-president Md Shahidullah earlier said that the steel industry was facing one of its worst-ever crises due to a steep decline in infrastructure projects.聽聽
He said that the mills were forced to incur a loss of over Tk 5,000 per tonne as the current production costs stood at Tk 88,000-90,000 per tonnes because the raw material prices remained either unchanged or witnessed a hike in the global market.
They are forced to sell at a lower price to avoid blacklisting, loan classification and default, he added.聽
According to聽data from the Implementation Monitoring and Evaluation Division under the planning ministry, the interim government implemented only 2.39 per cent of its Annual Development Programme in the first two months of the 2025-26 financial year, a decline from the same period last year despite a shortened budget.
In July-August of FY26, a total of Tk 5,714.83 crore was spent from the development budget, which was Tk 7,143.08 crore in July-August of FY25 with an implementation rate of 2.57 per cent.
According to industry insiders, the interim government had halted many mega projects initiated聽under the previous administration.
The BSMA has 37 members, but some have shut down their production and a number of factories were operating at 60-70 per cent of their capacity.聽聽
BSMA also stated that demand in semi-urban and rural areas had been declining.
According to the BSMA data, the steel industry鈥檚 overall production capacity is about 11 million tonnes.
There are about 120 steelmakers in Bangladesh, with some 40 large companies dominating the market.
Bangladesh鈥檚 per capita steel consumption was 45 kilogram in 2022 and is expected to increase to more than 45 kilogram by 2030, according to the BSMA.
