Prices of mild-steel rods have spiked again by nearly Tk2,000-3,000 per tonne in a week’s time after falling for several weeks.
According to industry insiders, 60-grade MS steel was sold at Tk89,500-92,000 per tonne, based on various company rates, while 40-grade MS steel was sold at Tk85,500 per tonne.
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, import cost of raw materials increased by almost 20%, 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 sector people. Talking to , 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 shortage of raw materials as the price of raw materials in the international market also increased relatively and were still on the rise, he also said.
“We do not see any sign of the reduction in the price of the rod at this moment,” Sengupta said, adding that production costs further went up due to the fuel price hikes. Jamal Uddin, owner of Kallyanpur Natun Bazar-based trader Jannat Enterprise, said that the prices of rods again spiked by Tk2,000-3,000 per tonne since the first week of August, after a short-lived drop of two or three weeks.
“We are selling rods at different prices based on brand variety, BSRM for Tk91,000 –92,000 per tonne, AKS for Tk89,000–89,500, and Rahim Steel Tk88,000-Tk89,00,” he added.
Manufacturers also said that the price of US dollars shot up to Tk108-110 from Tk85.
If they fixed it at Tk105 per tonne, then the price of rods would increase by 20% to Tk97,000-100,000. But they did not raise it that high, fearing backlash and lower sales, they further said.
Transport costs go up
Rod traders said that earlier they used to spend Tk1,100 on per tonne of rods as transport cost from Chittagong to Dhaka.
But since the hike in the fuel price, they have to pay Tk275 more to transport the same amount. Moreover, the truck fare for transportation within Dhaka has increased from Tk500-1,000 per tonne, they added. Meanwhile, the rising cost of rods is having a direct impact on real estate, private homes 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 of rod prices, though it is less for residential construction.
Mazharul Islam Mamun, general manager of Basic Builders Limited, told that they started many projects when the price of rod was Tk60,000, now this price has almost doubled. Rod manufacturers said that Bangladesh has to depend on imported scrap material and the price of imported melting scrap is currently $490-$500 per tonne, increased sharply after a short-lived drop. Bangladesh sources scrap from Canada, Japan, UAE, Australia, Africa, and China. Construction work in these countries has increased at large scale after the return of normalcy from Covid-19, which has led to an increased demand for scrap, manufacturers added.
