The price of MS rods has been on the rise for a while now, with the latest prices having gone up by Tk3,500 in just a week.
Steel manufacturers blamed this on the rising price of melting scrap — the main raw material for rods. Melting scrap prices have been rising in the domestic and international markets for several months.
Moreover, the Ukraine-Russia crisis has worsened the situation as these two are the source of around 50% of the world's demand for pig iron, a crude form of the metal.
Additionally, ship freight fares, price of fuel, and transportation costs have increased in the global and local market, adding to the already high costs of producing MS rods.
The rising cost of rods is having a direct impact on the real estate and construction sectors of the country by driving up building costs.
Construction industry insiders said that costs have increased by around 25-26% due to the hike of rod prices, though it is less for residential construction.
According to the state-owned Trading Corporation of Bangladesh (TCB), as of March 24, the price of 60-grade MS rods was Tk91,500 per metric ton, which was Tk88,500 in the last week, Tk82,000 in the last month, and Tk67,000 last year.
The 60-grade MS rods experienced a 11% monthly hike and 26% year-on-year hike, said the TCB data.
The price of 40-grade MS rod has also experienced a record hike.
As of March 24, it was being sold at Tk80,000 per metric ton, which was Tk77,500 in the last week, Tk77,000 in the last month, and Tk62,000 last year.
This variant experienced a monthly hike of 7.5% and a year-on-year hike of 20%, TCB data stated.
However, construction businesses said that the actual price of rods is Tk93,000 for 60-grade and Tk81,000 to Tk82,000 for 40-grade variant at most shops in the capital.
Jamal Hossain of M/S Jannat Enterprise of Kallyanpur Notun Bazar, told Dhaka Tribune that they are now selling BSRM rods for Tk92,000 per metric ton, and Bandar Steel Industries Ltd rods for Tk91,500.
Lion Sharif Ali Khan, vice-president of the Real Estate and Housing Association of Bangladesh (REHAB), told Dhaka Tribune: “All the steel and re-rolling mills in the country have increased the prices together and we and our customers are suffering. Steel prices are rising abnormally every week, so we do not understand exactly how much price we should fix per square foot of area.”
He also said people bought flats by paying in advance for the per square foot prices before construction, but the price of steel has increased many times since then, driving up construction prices.
“We cannot even cover our production costs as we do not have the opportunity to refix the price by adjusting increased production costs. Moreover, the new customers have to pay more than the previous ones for the same flat,” he added.
Mazharul Islam Mamun, general manager of Basic Builders Limited, told Dhaka Tribune that rod prices are rising almost every day now, but they are not able to increase the price of their flats every day.
“But the price of all the materials is going up, there are many projects that we started when the price of rod was Tk60,000, now this price has almost doubled,” he added.
He also said that now they have no choice but to raise the prices to keep the business afloat.
“However, we have a commitment to our customers. So, we have been trying to raise the price per square foot gradually,” he added.
He also said that the prices of materials continue to skyrocket, business needs to be sustained, and customer commitment needs to be maintained — from all aspects, they are not in a comfortable situation.
“And the situation is worsening day by day and we have nothing to do but move ahead with the projects,” he added.
The prices of billets, plates, and scraps have also shot up abnormally along with the rods, said industry insiders.
Real estate businesses have asked the government to formulate a regulatory body under the supervision of the Commerce Ministry to fix rod prices.
Talking to Dhaka Tribune, Tapan Sengupta, deputy managing director of BSRM, said that they have to import 95% of the raw materials from the international market.
“The retail price of steel is still below the present price of scrap steel in the global market,” he added.
He also said that the importers are importing raw materials from the global market so that the development work of the country is not hampered, not to make profits.
“However, the Ukraine-Russia conflict plays a key role in the price hike. Due to the war, the supply is much lower than the demand in the international market,” he added.
He also said that the price of steel here is still below that of countries like Japan and India, adding that: “Despite having their own raw materials, the price of rods is comparatively higher in India than here.”
Rod manufacturers also said that the price of scrap steel has reached $730 to $750 per metric ton, which was $300 to $350 in October last year.
Moreover, due to the sanctions on Russia, Bangladesh has to deal with only the US.
However, Bangladesh also sources scrap from Canada, Japan, UAE, Australia, Africa, China.
In these countries, the construction work has increased at large scale after the return of normalcy from Covid-19, which has led to an increased demand for scrap, the manufacturers added.