The prices of mild-steel (MS) rods kept rising since the second week of August due to soaring dollar rates, fuel price hikes and from load-shedding.
The price of the key construction material reached between Tk89,000-98,000 per tonne for 60-grade variants across the country based on brands and quality, while 40-grade MS rod was sold at Tk85,000-86,000 per tonne.
According to the market insiders, the prices of rods hiked by Tk3,000-5,000 in the last one week and their sales had slightly fallen.
Before August 6, the prices were Tk87,000-87,500 for 60-grade and Tk81,000-83,000 for 40-grade, said insiders and state-owned Trading Corporation of Bangladesh (TCB).
However, manufacturers and traders of the steel sector said that rod prices increased due to several reasons, but mainly due to the abnormal depreciation of the Taka against the US dollar.
Due to this depreciation, the import cost of raw materials increased by almost 20-25%, they said.
Moreover, the cost of transportation increased significantly due to higher fuel prices, as the government increased the price of all types of fuel oil by 51% on August 6.
In addition, production decreased due to the gas-electricity scarcity, eventually leading to a production cost hike of rods, said people working in the sector.
Jamal Uddin, the owner of Kallyanpur Natun Bazar-based trader Jannat Enterprise, said that the prices of rods again spiked by Tk5,000-9,000 per tonne in two phases since the first week of August, after a short-lived drop for two or three weeks.
“We are selling BSRM at Tk98,000 per tonne, AKS at Tk96,000 per tonne and Bandar at Tk95,000 per tonne for 60-grade,” he added.
The retail prices of rods hiked by Tk3,000-4,000 per tonne compared to last week as manufacturers have increased prices, he added.
Shahab Uddin, proprietor of Janata Traders of Dhamrai said that he was selling Anwar Ispat at Tk92,000 per tonne, BSRM at Tk97,000 per tonne, and AKS at Tk94,500 per tonne.
Talking to Dhaka Tribune, Tapan Sengupta, deputy managing director of BSRM, the country’s top rod producer, said that manufacturing costs had gone abnormally high due to the depreciation of the Taka against the greenback.
Moreover, production declined due to a shortage of raw materials as the price of raw materials in the international market also increased and was still on the rise, he also said.
“We do not see any sign of rod prices coming down at this moment,” Sengupta said, adding that production costs further went up due to the fuel price hikes.
Manufacturers also said that their production was reduced by around 30% due to the load shedding. Dollar rates surged by 28% compared to March, but their product prices have not gone up equivalently.
They said that rod prices should be Tk1.14 lakh per tonne, considering the current production costs.
However, rod traders said they used to spend Tk1,100 per tonne of rod on transportation from Chittagong to Dhaka. “But since the hike in the fuel price, we have to pay Tk275-Tk400 more to transport the same amount.”
Moreover, the truck fare for transportation within Dhaka has increased from Tk500 to Tk1,000 per tonne, they added.
Meanwhile, the rising cost of rods is having a direct impact on real estate, private housing and other construction sectors by driving up building costs.
According to market insiders, construction costs have increased by around 25-30% due to the hike in rod prices, although it is less for residential construction.
Bangladesh has to depend on imported scrap material and the price of imported melting scrap is currently $490-$500 per tonne, which increased sharply after a short-lived drop.
Bangladesh sources scraps from Canada, Japan, UAE, Australia, Africa, and China.
Major Bangladeshi brands like BSRM, AKS, Bandar, Rahim Steel, Anwar Ispat, KSRM, RSRM, Vikrampur Steel and GPH Ispat meet 60%-70% of the local demand and the rest are covered by non-branded companies.
Pimple Barua from Chittagong contributed to the report
