Steel Industry of Bangladesh

Introduction
Steel is a basic raw material for infrastructural development and multiple other uses. The demand for steel
will inevitably grow in line with the country’s economic and infrastructural development.
Steel industry is an established and growing industry in Bangladesh. Predominantly based in the port city
of Chittagong, the industry has emerged as a major contributor to the national economy. According to the
experts, the growth of steel industry in Bangladesh is mainly induced by the rapid expansion of the
country's shipbuilding and real estate sector, as well as the major investments in various infrastructure
projects throughout the country.
History
The first ever steel mill was established in 1952 by the H Akberali Group of Industries as the "Bangladesh
Steel Re-rolling Mills (BSRM)". Located at Nasirabad, Chittagong, the plant formed re-enforcing bars
and structural sections. The mill gradually prolonged, adopting new technological know-how by setting
up a cross-nation European mill in 1987 which incorporated a wire-rod mill. The BSRM group added a
captive billet manufacturing plants in 1996 so as to make sure a stable distribution of billets of its plants.
In 2006, the company installed pilot cold rolling mill to make ribbed high strength wires.
By this time, KSRM Steel Plant Ltd emerged. Very recently, they have established Billet Plant at
Chittagong. Their factory situated at Ghoramara, Sitakunda at Chittagong. KSRM is a steel manufacturing
organization belonging to Kabir Group of Industries. One of the largest rolling mills in Bangladesh.
Porter Five Forces Analysis Steel Industry

Barriers to entry
Capital Requirement: Steel industry is a capital intensive business.
Economies of scale: As far as the sector forces go, scale of operation does matter. Benefits of economies
of scale are derived in the form of lower costs, R& D expenses and better bargaining power while
sourcing raw materials.
Government Policy: The government has a favorable policy for steel manufacturers. However, there are
certain discrepancies involved in allocation of iron ore mines and land acquisitions. Furthermore, the
regulatory clearances and other issues are some of the major problems for the new entrants.
Product differentiation: Steel has very low barriers in terms of product differentiation as it doesn't fall
into the luxury or specialty goods and thus does not have any substantial price difference.
Bargaining power of suppliers: The bargaining power of suppliers is low for the fully integrated steel
plants as they have their own mines of key raw material. However, those who are non-integrated or semi
integrated has to depend on suppliers.
Threat of substitutes: There is no alternative to substitutes steel in Bangladesh.
Bargaining power of Consumers: Some of the major steel consumption sectors like shipping, consumer
durables and power generation enjoy high bargaining power and get favorable deals. However, small
and retail consumers who are scattered and consume a significant part do not enjoy these benefits.
Major Firms
 Bangladesh Steel Re-rolling Mills (BSRM)

 H Akberali Group of Industries
 KSRM Steel Plant Ltd
 GPH Ispat
 RATANPUR STEEL Re-rolling Mills Ltd
 AKS Ltd.
 Anwar ISpat
Customers of the Steel Industry
 Contractors
 Property developers
 Export processing zones
 Road and bridge construction companies
 Real Estate sector
 Shipbuilding companies etc.
Market
The domestic consumer demand of steel is growing day by day due to the increased public works and
some ongoing large projects.
The steel exporters of Bangladesh have ensured strong foothold especially in the African markets. As a
result, Bangladesh is now considered as a major emerging player in the global stage
Growth of the Industry
Bangladesh Steel industry is emerging as one of the major industrial sectors of the country. It consists of
small up to the largest scale of steel melting and re-rolling factories across the country that mostly
produce deformed bar rod of different grade (40, 60, 500), angel, channel and coil for the construction
industry. Though the history of Steel Industry is not older one but it can make a glorious future. Before
1971 Bangladesh did not have any steel mill and even after the liberation there were only a few steel
factories in the country. In 1990s the actual development began in this sector through a revolution.
During that period the building constructing agencies or developer companies came forward to build
modern infrastructure. Then with the increasing demand, new investors started investing in steel or rod
production. In 2012 we have almost 400 mills across the country including Dhaka, Chittagong. Although
most of them are manual steel plants, 30 mills among them are automated.
Firms follows different competitive strategies
Cost leadership: RSRM offer their steel at a competitive price.
Differentiations: BSRM they focus on quality of the steel.

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Introduction

Porter Five Forces Analysis Steel Industry

Capital Requirement: Steel industry is a capital intensive business.

Threat of substitutes: There is no alternative to substitutes steel in Bangladesh.

 Bangladesh Steel Re-rolling Mills (BSRM)

Customers of the Steel Industry

Firms follows different competitive strategies

Cost leadership: RSRM offer their steel at a competitive price.

Differentiations: BSRM they focus on quality of the steel.

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