Rod prices go up - Share market analysis of dhaka stock exchange, Bangladesh

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24 March, 2016 10:57 AM Source: The Daily Star Bangladesh

Prices of iron rods went up steadily in the last couple of weeks, putting the construction sector in an unstable situation.

Although millers say they are compelled to increase rod prices due to a hike in the prices of raw materials in the international markets, builders alleged that a “syndicate of millers” has a hand in the matter.

Builders and traders said iron rod prices rose by Tk 8,000 a tonne in the last few weeks. Prices are increasing by Tk 500 to Tk 1,000 a tonne almost every day, they said.

Millers began hiking the prices “all of a sudden” a couple of weeks ago, retailers said.

Prices may go up further in the days to come in line with the prices of raw materials in the international markets, according to millers.

Mosharraf Hossain, proprietor of Almas Trading, a retail and wholesale shop at Nasirabad in Chittagong, said he used to buy 40-grade rods at Tk 32,000 a tonne a couple of weeks ago, the price of which shot up to Tk 40,000 now.

He bought different brands of rods at between Tk 42,000 and Tk 45,000 a tonne a few weeks back, which is now between Tk 50,000 and Tk 52,000.

Denying the allegations of forming a syndicate, Tapan Sen Gupta, executive director of Bangladesh Steel Re-Rolling Mills (BSRM), said rod prices went up for many reasons.

Firstly, the price of billets (a raw material for making rods) increased in the international markets, he said.

Secondly, the price of scrap ships (a raw material of billet) also went up; thirdly, there are rumours that the government is going to increase the duty on billets.

The price of billets increased by 100 dollars a tonne in China a month ago, he said. As China increased the price of billets, other countries followed suit, he added.

Most of the billets Bangladesh needs come from China; the volume was around 1.5 million tonnes last year, Gupta said.

“BSRM produces billets in the country and we use scrap ships as raw materials, but prices of the scrap also shot up by Tk 7,000 a tonne,” he said.

Shawkat Osman, marketing officer of Kabir Steel Re-rolling Mills (KSRM), said they were compelled to increase rod prices to respond to the billet price hike.

“We used to sell a tonne of 500W rod for Tk 43,500 a month ago, but today (Tuesday) we are selling it for Tk 51,500.”

A marketing official of Abul Khair Steel, preferring anonymity, said as the demand for rods remains high between February and May, the price naturally increases then. Construction projects speed up during this period as the government's spending on its annual development programme goes up.

But the recent rise in the price of billets in the international markets also played a role in aggravating the situation, the official added.

SM Abu Sufian, vice president and Chittagong regional committee chairman of Real Estate and Housing Association of Bangladesh, said the construction sector has been facing a downturn for the last couple of years and it will suffer more for the hike in rod prices.


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