Rod prices, which have been spiralling since the turn of the year, have dropped by at least Tk 3,000 per tonne this week in a development that is set to bring a huge sigh of relief from realtors.
“We have brought down the prices by Tk 3,000 per tonne upon Commerce Minister Tofail Ahmed's request,” said Manwar Hossain, president of the Bangladesh Auto Re-rolling and Steel Mills Association (BARSMA).
Each tonne of 60-grade rod was selling for Tk 67,000-Tk 68,000 in Dhaka yesterday. Two weeks ago, they went for Tk 71,000-Tk 72,000, according to data from the Trading Corporation of Bangladesh.
Since January 1, the price of 60-grade rod soared about 25 percent thanks to the runaway prices of melting scrap in the international market following the US's announcement of 25 percent and 10 percent tariffs on steel and aluminium imports respectively from March 23.
The development has left realtors sweating: the price hike of rod, the most important material for the construction industry, comes at a time when the real estate sector has just started to look up after years of downturn.
“Though we have brought down the price, our cost of production has remained the same,” said Hossain, also the managing director of Anwar Ispat, one of the leading steel re-rolling mills in the country.
He went on to state that it would not be possible to lower the rod prices any further if the government does not consider the steel manufacturers' demands.
Mohammad Shahidullah, managing director of Metrocem Ispat, echoed the same.
Earlier on April 5, BARSMA called for slashing customs duty and advance income tax (AIT) on the import of scrap, a key raw material for steel, to arrest the escalating prices in the local market.
At present, the customs duty for scrap is Tk 1,500 per tonne and AIT Tk 800. BARSMA demanded lowering the customs duty to Tk 500 and AIT to Tk 400.
“The production cost of steel rod has increased abnormally in the last three months,” Hossain said. The US, the world's largest economy, generates 60 percent of the global scrap, and American millers have been stockpiling it upon anticipation of the protectionist move by Trump administration, escalating the prices in the global market.
The price of each tonne of scrap, which was $310 in the third quarter of 2017, now stands at $435, according to Hossain.
Bangladesh requires 40 lakh tonnes of scrap to make billet for manufacturing steel, according to BARSMA.
Of the sum, 35 lakh tonnes are imported and the rest is collected from ship-breakers and domestic market, according to Tapan Sengupta, executive director of BSRM, another big steel manufacturer in Bangladesh.
Each tonne of scrap collected from domestic ship-breakers now costs Tk 52,000-Tk 55,000, up from Tk 48,000 previously, according to Shahidullah.
Munir Uddin Ahmed, president of the Bangladesh Association of Construction Industry, which earlier threatened to suspend work on all the development projects of the government over the spiralling prices of construction materials, acknowledged that the rod prices have decreased this week.
But the price is still too high, he said, adding that it will be tough to continue the development work.
“The steel millers gave us some relief,” said Shafiqul Haque Talukder, managing director of Starlite Services, a construction firm.
But the firm's costs will still increase at least 3 percent.
“We have no other alternative way but to complete our projects. Otherwise, we will not get our payment at the end of the fiscal year,” he added.