Rod prices cross Tk 90,000 per tonne

The price of steel in Bangladesh has jumped 3.34 per cent within a span of just one week, with manufacturers citing it as a ripple effect of rising global demand for scrap and a recent hike of local fuel prices.

According to data of the state-run Trading Corporation of Bangladesh (TCB), each tonne of MS rod was selling for Tk 91,500 yesterday. But in actuality, the prevailing rate was Tk 92,000, according to Mir Nasir Hossain, managing director of Mir Akhter Hossain Ltd.

It was Tk 88,500 one week ago, said the TCB.

"The construction companies are about to go bankrupt due to the price hike of raw materials, particularly steel, which is one major raw material for the construction sector," he said.

According to him, some construction companies had already halted their ongoing works foreseeing loss of commercial viability and they are about to turn into loan defaulters.

Against this backdrop, the government should immediately take the initiative to adjust prices listed in ongoing projects, otherwise all development works will get stuck, he said.

He also said the implementation of projects under the government's Annual Development Programme would lose pace.

Shahriar Jahan Rahat, deputy managing director of Kabir Steel Re-Rolling Mills (KSRM), said the price of scrap steel, the sector's raw materials, reached to $730 to $750 per tonne.

Itwas selling for $300 to $350 in October last year before starting to rise as economies reopened and fuelled demand, prompting several countries, including India, to cut tariffs on its import.

Trade sanctions on Russia and its invasion of Ukraine exacerbated the problem as these two cater to around 50 per cent of the world's demand for pig iron, the crude form of the metal.

With the constraint of the supply of the crude form, focus shifted to scrap, propelling demand alongside prices, he said.

So Bangladesh's steel manufacturers are dealing with only the US to import scrap steel which resulted in the high prices within the country, Rahat said.

Bangladesh also sources scrap steel from Japan, Dubai and South Korea.

According to him, the present price of rod is beyond the capacity of consumers and sales have already declined by around 20 per cent over the last couple of weeks.

The price of steel here is still below that in countries like Japan and India, said Tapan Sengupta, deputy managing director of Bangladesh Steel Re-Rolling Mills (BSRM), by volume the largest steelmaker in Bangladesh.

Sengupta, however, claimed that the retail price of steel was still below the production cost taking into consideration the present input costs. He apprehends that the price would increase further in the coming days.

According to him, the price of rod should be Tk 95,000 per tonne taking into account the present price of scrap steel in the global market.

However, he said the manufacturers were adjusting prices with not only ongoing imports and but also stocks of scrap purchased earlier.

If the manufacturers increase the price in line with that of scrap steel, the implementation of development projects will get stuck, he said.

"We are trying to maintain the supply of rod to the development projects instead of making profit," he claimed.

He fears that the price would go up in the coming days due to an impending shortage of scrap steel globally due to the sanctions on Russia.

Besides, the recent increase in fuel prices has affected the price of steel as transport costs have gone up, said Sengupta.

On November 4, the government raised the prices of diesel and kerosene by Tk 15, or 23 per cent, to Tk 80 per litre.