Cheaper scrap, low demand do little to bring down rod prices
Mild Steel (MS) rod prices saw a slight decrease in September after hitting an all-time high this March despite a sharp decline in raw material prices in the last few months and the low monsoon demand.
Wholesale prices of these raw materials – scrap, plate and billet – have decreased by Tk15,000 to Tk19,000 per tonne over the past three months but top-grade MS rod prices are still hovering between Tk93,000-95,000 per tonne, according to traders and shipbreaking yard owners.
The rod market has been gradually heating up since November 2020. The price of the product was Tk55,000 per tonne in October 2020. Prices hit the Tk1 lakh mark this March, triggering a decline in demand.
Demand still remains low in the market due to high prices, reduced construction work in monsoon and the government's austerity in undertaking development projects, said traders.
Keep updated, follow The Business Standard's Google news channel
Alamgir Hossain, a wholesale rod trader in Chattogram and the proprietor of Khaja Metal, told The Business Standard, "Since the price of rods reached the Tk1 lakh mark, many have halted construction work. Besides, the construction work of many government projects is now at a standstill due to the increase in the dollar price. That is why the sale of rods at wholesale and retail levels has fallen sharply."
Alamgir said, "During normal times, we sell 30-40 trucks – 24 tonnes each – of rods a day but the number has now come down to less than 10 trucks." He suggests that manufacturers should reduce the rod price further in order to boost the rod market.
According to the Bangladesh Steel Manufacturers Association (BSMA), the country currently has an annual demand of 70-75 lakh tonnes of MS rods. About 55 auto steel re-rolling mills and more than 100 semi-auto and manual mills in the country supply these rods.
Tapan Sen Gupta, deputy managing director of BSRM, the country's top rod producer, told TBS, "There is no possibility of a further reduction than the current prices of rods. Though the booking price of raw materials in the international market has decreased, the production cost of the rod is higher than the current market price due to the strong dollar and high prices of gas and electricity."
Prices of raw materials now
Shipbreaking yard owners said at present per tonne of scrap is selling for only Tk54,000 in the local market, which was around Tk70,000-71,000 at the end of May.
Along with scrap, the prices of plates and billets have also dropped substantially. Currently, per tonne plates and billets are selling for Tk63,000 and Tk70,000, respectively. Three months ago, plates were sold for Tk82,000 and billets for Tk85,000 in the market.
Abu Taher, president of the Bangladesh Ship Breakers and Recyclers Association, told TBS, "Though the price of scrap and old ships has been falling in the global market for the last three to four months, the dollar rate is increasing and more money has to be paid against imported scrap ships."
According to goshipping.net, the price of scrap ships in the international market has decreased by more than $120 per tonne in the last three to four months. Currently, scrap is selling at $495-$505 per tonne in the global market, which was more than $620 during the March-May period.
Prices of rods now
According to MS rod manufacturing companies, 75-grade MS rods are currently selling in the market for Tk93,000-95,000 per tonne, depending on the brands. BSRM is selling at Tk95,000, Abul Khair Steel (AKS) at Tk94,000, and KSRM and GPH Ispat at Tk93,000.
Prices of 60-grade (auto) rods have decreased by Tk7,000 per tonne over the last few months and are currently selling between Tk83,500-87,000 per tonne depending on the brands, which was between Tk90,000-92,000 per tonne three months ago.
The prices of 60-grade (semi-auto) rods have decreased by Tk10,000 per tonne and are currently selling between Tk79,000-80,000 per tonne depending on the brands, which was sold for Tk90,000 per tonne three months ago.
