In the previous three years, the steel industry has suffered due to economic and political uncertainties, as reported by BigMint, an India-based market intelligence firm. According to BigMint, the demand for steel, which serves as an indicator of economic activity and growth, may require up to two years to stabilize.
Local steel producers note that the timeline of the domestic steel sector closely reflects the significant internal and external challenges faced by the economy in recent years. The disruptions began with the Covid-19 pandemic, followed by disturbances in the scrap market due to the Russia-Ukraine conflict. Additionally, factors such as a weakening currency, reduced public spending, and other macroeconomic pressures have compounded the industry’s challenges.
The political transition in August of the previous year further complicated the circumstances for steel manufacturers, as development expenditures plummeted. Concurrently, persistent high inflation, elevated interest rates, and political uncertainties have subdued activity in real estate and private sector construction.
Presently, the local steel industry has the capacity to produce 1.36 crore tonnes per year, while demand has dwindled to just 45 lakh tonnes, according to BigMint’s data. Despite the current downturn, there remains a sense of optimism. The World Bank, forecasting a 4.8 percent economic growth rate in FY2025-26, anticipates a potential increase to 6.3 percent in FY 2026-27.
Attention is currently focused on the upcoming general elections in February 2026, with numerous infrastructure projects in the pipeline awaiting implementation, which would benefit the steel industry. An additional 30 lakh tonnes of capacity is expected to be added by 2027, although industry insiders caution against further investments in steel production without aligning them with demand.
Forecasts suggest a decline of 11 percent in crude steel production in 2025 following a 10 percent drop in the previous year. Industry experts warn that if this downward trend persists, the sector could consolidate around a few dominant players, diminishing competition and marginalizing smaller mills.
Abul Khair Steel (AKS), a leading manufacturer, recently expanded its capacity with a new plant producing 16 lakh tonnes of deformed bars annually, raising its total capacity to 30 lakh tonnes per year and establishing itself as the largest producer in the country. BSRM follows closely with a capacity of 24 lakh tonnes. Tapan Sengupta, deputy managing director of BSRM, expressed that the industry is struggling and emphasized the necessity for increased government spending on development projects to revitalize the sector.
Sumon Chowdhury, chairman of RRM Steel and secretary of the Bangladesh Steel Manufacturers Association (BSMA), highlighted that production adjustments have been made in response to sluggish construction activity and financial constraints. He noted that similar challenges are being faced by many developing economies and emphasized the urgent need to align supply with demand to mitigate risks associated with excess capacity.
Chowdhury mentioned ongoing efforts by the association to collaborate with the government and financial institutions to ensure stable raw material supplies, secure financial assistance, and establish a consistent policy framework. Manwar Hossain, former BSMA president and chairman of Anwar Group of Industries, underscored the impact of various crises, including the Covid-19 pandemic, escalating global scrap prices, shipping disruptions, and currency devaluation, on the steel industry.
Hossain highlighted the dwindling demand resulting from political changes, especially the reduction in government project contracts. He warned that the closure of numerous small and medium-sized mills due to mounting losses could lead to a situation where a few large players dominate, posing long-term risks to the industry’s health.
Regarding market prices, BigMint data revealed that rebar prices in Dhaka have dropped to Tk 73,700 per tonne, the lowest in over three years, while prices in Chattogram are slightly higher at Tk 77,100 per tonne. Credit-based transactions have surged, impacting the traditional cash-driven market, as mills are operating at only 30 to 40 percent capacity due to ongoing challenges such as monsoon disruptions, import restrictions, and weak demand.
Despite a 10 percent year-on-year increase in steel scrap imports to 40 lakh tonnes in the first nine months of 2025 driven by low global scrap prices, the banking crisis remains a major hurdle. Several local banks have faced restrictions from international suppliers, complicating the process of opening letters of credit. Nevertheless, industry leaders remain cautiously optimistic about the future, banking on stability, clear policies, and a functioning government to gradually revive demand, especially with signs of recovery in foreign reserves and the readiness of various infrastructure projects to recommence.