Global scrap price surge drives up steel rod prices in Bangladesh

Highlights:

• Bangladesh MS bar prices rising as global scrap rebounds
• Imported scrap up $25–30 per tonne, lifting replacement costs
• Some mills raised prices Tk1,000; bigger hikes expected
• Turkey-led global demand and winter disruptions tighten supply
• Retail prices steady so far amid weak domestic demand
• Overcapacity and rising costs keep rebar prices under pressure

Prices of mild steel (MS) bars in Bangladesh have begun to rise as a rebound in global ferrous scrap prices pushes up replacement costs for local re-rolling mills, raising concerns over construction expenses for homebuilders and contractors.

Industry insiders said imported scrap prices have increased by around $25-30 per tonne over the past week, reversing a prolonged downward trend seen over the last year. 

The higher replacement cost is now feeding into the domestic market, with several small and mid-sized mills already raising rod prices by up to Tk1,000 per tonne in different regions.

Large producers are also expected to adjust prices soon, according to Bangladesh Steel Manufacturers Association (BSMA) President and GPH Ispat Chairman Jahangir Alam.

"Due to weak demand, steel prices have been declining in Bangladesh for nearly a year. At present, MS rods are selling at the lowest levels in the last five years," Jahangir told The Business Standard. "With the onset of winter, global scrap prices have risen sharply, leaving local manufacturers with no option but to adjust prices."

He further noted that rod prices in the Dhaka market rose by Tk1,000-1,500 per tonne on Thursday alone, adding that companies may eventually need to raise prices by Tk3,000-4,000 per tonne to remain aligned with international costs.

Infograph: TBS

Data from international price reporting agency Argus show Turkey's deep-sea heavy melting steel (HMS) 1/2 (80:20) scrap benchmark falling to around $336 per tonne during the summer downturn before rebounding to the $360-370 range in early December.

Turkey, the world's largest seaborne scrap importer, often sets the direction of global prices. Market participants said renewed Turkish buying, combined with winter-related supply disruptions in Europe and North America, has tightened availability and pushed prices higher.

Moreover, during winter, scrap collection, transportation and port operations slow significantly in Western markets, reducing spot supply. 

In parallel, India's increased presence in the import market has intensified competition for scrap cargoes, making it harder for Bangladeshi mills to secure material on favourable terms.

However, despite some wholesale price increases by producers, retail prices in Dhaka and Chattogram remained largely unchanged until Thursday, market checks found.

Chattogram-based trader Asaduzzaman, proprietor of Zaman Enterprise, said premium-grade BCSR rebar was selling at Tk80,000 per tonne, AKS and KSRM at Tk78,000, and GPH Ispat at Tk76,000.

"No company has officially announced a price hike yet, but we have been informally informed that prices will be raised within this week," he said.

While a few mills have already increased wholesale prices, major producers such as BSRM and AKS have so far refrained from immediate adjustments. Company officials said demand remains relatively weak compared to previous winter seasons, forcing cautious pricing decisions.

BSMA Secretary General and Rani Re-Rolling Mills Chairman Sumon Chowdhury said seasonal price increases during December to February are common due to higher international scrap demand.

"Bangladesh has no coordinated pricing mechanism. Mills are forced to react individually to global price movements," he said.

Anwar Group Chairman Manwar Hossain said the steel sector has faced prolonged financial stress since the pandemic.

"Negative returns over an extended period caused severe capital erosion, eventually forcing many factories to shut down," he said. "With scrap prices rising globally, local manufacturers now have no alternative but to raise prices."

During the Covid-era global scrap shortage, premium-grade rebar prices in Bangladesh surged to as high as Tk110,000 per tonne. A global slowdown and weak domestic demand later pushed prices down to Tk70,000-80,000 per tonne last year, the lowest level in five years.

Bangladesh's annual steel demand is estimated at 8-9 million tonnes, driven mainly by housing, infrastructure and industrial construction. The country's installed steelmaking capacity exceeds 11 million tonnes, indicating significant overcapacity amid slowing demand.

The sector has seen investments worth tens of thousands of crores of taka over the past decade, including major expansions by BSRM, GPH Ispat, AKS and KSRM. Despite this, capacity utilisation has remained under pressure due to subdued construction activity and volatility in raw material prices.

Bangladesh produces around 7 million tonnes of steel products annually and imports more than 4.2 million tonnes of scrap and billet to support production, industry data show.

Traders said sustained firmness in global scrap prices could keep local rebar prices under upward pressure in the coming weeks, even if domestic demand remains modest.