Bangladesh’s SS Steel boosts capacity with purchase of Saleh Steel

The deal, which was first made public on Tuesday August 4, sees SS Steel take 99% of the shares in Saleh Steel Industries Ltd. SS Steel has pledged to invest a further 1.34 billion taka toward the “smooth running” of the Saleh plant.

Saleh Steel has a steelmaking capacity of 84,000 tonnes per year from an induction furnace in Chattogram province. The unit is located under 10 kilometers away from production facilities belonging to BSRM and Abul Khair, which are the country’s two largest steelmakers.

On completing the deal, SS Steel will raise its overall steelmaking capacity to 192,000 tpy. SS Steel previously had a capacity of 108,000 tpy as of 2019, according to Bangladeshi stock broker UCB Capital.

SS Steel has a production facility and head office within the administrative division of Dhaka, which also holds the country’s bustling capital city.

Like most Bangladeshi steelmakers, the company produces steel billet from an induction furnace which consumes scrap and sponge iron. It then rolls the billet using a bar mill made in Italy, the firm’s website said.

Some market participants expect further mergers and consolidation within Bangladesh’s steel industry while its markets continue to mature over the coming years.

Induction furnace mills in Dhaka have endured a difficult time in recent months, with the Covid-19 lockdown in India and subsequent measures in Bangladesh making the procurement of sponge iron – which is supplied by producers in India – very challenging.

Steel demand in Bangladesh is also being squeezed by the country’s Covid-19 crisis, and some steelmakers have resorted to slashing domestic billet prices in recent weeks to achieve sales and generate cash.

Bangladesh has a steelmaking capacity of around 9 million tonnes, but most of this capability is concentrated in the hands of the country’s four largest producers.

To find out more about the development of the Bangladesh import market for steel scrap, download Fastmarkets’ new whitepaper which explores the topic in more depth.