Chattogram-based steel and ship breaking industry has defaulted BDT10,000mn in the past eight years. These defaults are creating a bad reputation for Bangladesh’s major revenue generating industry.
In 2013, the international and Bangladesh domestic steel market collapse, which dealt a severe blow to the industry. Steel firms made huge losses. On the other hand, the banks lent large amounts to shipbreakers hoping for the market to stay steady. Some scrap yards had to sell steel scrap at $220/mt in the local market, which they bought at $760/mt from the international market.
Banks are concerned about recovering the debt amount as many businessmen have dropped out of the steel and shipbreaking business. This could lead to a liquidity crunch as the banks would be forced to exercise caution while lending to the industry.