Rod prices hit 3-year low as construction demand dries up

Steel rod prices have fallen below Tk 90,000 per tonne for the first time in more than three years, as construction demand continues to fall amid reduced government spending and economic uncertainty.

The retail price of 60-grade mild steel (MS) rod, widely used by construction sites and infrastructure projects, dropped 12 percent year-on-year last week to between Tk 85,000 and Tk 89,000 per tonne, down from Tk 97,500 to Tk 99,500 a year ago, according to Trading Corporation of Bangladesh (TCB) data.

Prices are now lower than they were on March 23, 2022, when a tonne sold for Tk 91,500. At its peak in mid-2024, the price neared Tk 1 lakh.

Before the political changeover in August last year, the country consumed around 6.5 lakh tonnes of MS rod each month, according to the Bangladesh Steel Manufacturers Association (BSMA). Since then, demand has steadily declined to about 4 lakh tonnes in recent months, a drop of roughly 35 percent.

BSMA said public construction and large-scale government projects, which usually account for nearly two-thirds of domestic steel consumption, have been in consistent decline since July last year.

"In just minutes, the price dropped 9 percent on July 27 this year. In such volatility, running a business is very difficult," said Sumon Chowdhury, secretary general of the BSMA.

Chowdhury said domestic demand has almost disappeared. "It is a major concern for the industry," he said, citing the lowest Annual Development Programme (ADP) implementation in 49 years as a key factor behind the slump.

He added that smaller producers such as Bandar Steel and Mohammadi Steel have suspended production due to limited access to bank finance. "Many mills cannot survive under current conditions," said Chowdhury.

Monsoon-related disruptions have worsened the situation. "Many government and private construction sites went under water," he added.

With rains continuing, Chowdhury, chairman of RRM Group, does not expect a rebound anytime soon. "Some are selling at Tk 85,000 or less just to keep their factories running."

He also commented that retail prices do not reflect the true state of the market. "Mill-gate rates are Tk 2,000 to Tk 3,000 lower. The situation is dire."

Tapan Sengupta, deputy managing director of BSRM, also pointed to the sustained downturn in the domestic steel market due to falling demand and prices.

He said production levels have remained steady, and the decline is entirely demand-led. "When demand drops, prices follow. That is basic market economics," he said.

He added that while companies had seen profitability in the past, many are now struggling to meet fixed costs such as salaries, loan repayments, and utility bills.

"Many are selling stock at minimal margins just to remain operational," he said.

Quoting industry data, Sengupta said demand has dropped by as much as 35 percent in some areas. "This is more than seasonal, it is a continuous downturn since last year, compounded by the monsoon."

He believes any recovery will depend on the return of government-funded infrastructure work or fresh investment.

"The overall situation is far from ideal," said Mohammed Jahangir Alam, managing director of GPH Ispat. "Payments in the construction sector have slowed, and most major projects are now on hold," he said.

Alam said political uncertainty has prompted both domestic and foreign investors to adopt a wait-and-see approach.

As a result, construction activity in cities has declined by 30 to 40 percent, while larger projects have seen a fall of up to 60 percent, he said.

However, he added that rural economic activity remains relatively stable. Road maintenance and smaller infrastructure works are still ongoing, though at a slower pace.

Heavy rainfall over the past six weeks has also disrupted production, further straining supply chains and manufacturing operations, according to Alam.