Bangladesh’s steel sector, like much of manufacturing, is under prolonged pressure from weak demand, rising input costs, and high financing expenses, with industry leaders warning that the construction-linked slowdown has weakened balance sheets and pushed many firms close to minimum operating viability.
Bangladesh Steel Manufacturers Association President Mohammad Jahangir Alam said in an interview with Mahfuz Ullah Babu of TIMES of Bangladesh that recovery now hinges on three immediate policy priorities—full execution of the Annual Development Programme (ADP), tax stability, and lower financing costs.
According to him, fiscal discipline and public investment execution have become critical in determining market demand and the sector’s future. The construction material industry is trapped in a sustained adverse cycle where sales are falling while costs continue to rise, compressing margins to unsustainable levels.
“Sales are declining, input costs are increasing one after another, and financial stress is mounting,” he said.
Jahangir, managing director of GPH Ispat and chairman of Crown Cement, said the sector has already absorbed multiple rounds of higher duties and taxes in recent years and warned that any further increases would deepen losses rather than expand the state’s revenue base.
“We are hearing that taxes may be increased again, but these need to be reduced instead of being raised further,” he said.
He identified energy and financing costs as immediate pressure points, noting that recent fuel price increases alone have raised costs by about Tk3,000 per tonne, while weak demand has limited the ability to pass on higher input costs.
“When demand was strong, increased costs could be passed on. But that is not working now, as mills struggle to utilise capacity at a reasonable level.”
He said companies are increasingly drawing down capital to sustain operations, as repeated cost shocks over the past four years have weakened corporate balance sheets and created acute working capital shortages across construction-linked industries. Currency depreciation, he added, has made imports about 45 per cent more expensive, while additional duties and taxes have further inflated costs in local currency terms.
Bank interest of around 14 per cent has added further strain, leaving gross margins insufficient to service debt for most firms.
Capacity utilisation in steel and cement plants has fallen to 30–60 per cent, with only a few firms operating near minimum survival levels. Steel demand, which previously stood at 5.5–5.7 million tonnes per annum, has now dropped to 4–4.5 million tonnes, while cement demand has fluctuated between near stagnation and contraction.
Jahangir linked the slowdown primarily to weak public investment execution, saying lower ADP implementation over the past four to five years has reduced economy-wide demand, while private sector construction has also slowed.
“If ADP worth Tk3 lakh crore is implemented properly, it will bring cash flow into the economy and restore growth momentum,” he said.
He argued that fiscal constraints are being reinforced by structural dependence on bank financing, with both government and private sectors drawing heavily from the same credit pool, crowding out industrial expansion. Private sector credit growth has already fallen to a historic low of below 5 per cent, while inflation remains above 9 per cent.
He said capital market financing should play a larger role in infrastructure funding to ease pressure on the banking system and improve the long-term financing ecosystem.
“If large infrastructure projects such as highways are financed through the capital market, it will ease pressure on banks and stabilise the financial system,” he said.
While expressing confidence in the new leadership at the capital market regulator, he said consistent policy support and stronger institutional coordination will be necessary to restore investor confidence and deepen equity market participation. He added that, in a tight financial environment, firms could consider equity dilution, but market conditions remain underdeveloped for such transitions.
“The much-needed recovery depends on three immediate actions—full ADP execution, tax stability, and lower financing costs,” he said. Without these, he warned, the sector will remain locked in a low-demand, high-cost environment marked by continued capital erosion.
