Rod prices hit all-time high amid dollar crisis
An increase in rod-making scrap prices on the international market, dollar crisis and energy price hikes are blamed
Prices of mild-steel (MS) rods, the key element in building construction, hit an all-time high on Wednesday with an increase of Tk5,000 per tonne in just seven days, multiplying pressure on the construction sector.
A tonne of the premium quality (75-grade) rod sold at Tk91,000-94,000 at different mills in Chattogram on the day, which was Tk87,500-89,000 a week ago. The rates of 60-grade rods also jumped to Tk89,000-91,000 from Tk84,000-86,000.
The rod prices, however, were on a downward trend with some fluctuations since they reached Tk92,000 per tonne in March 2022. The prices were Tk55,000 per tonne for a long time until October 2020 – the first reopening after Covid-19-related restrictions.
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Explaining the rise, rod manufacturers have said global prices of rod-making scrap – a large portion of which is imported – have been on the rise for the last two months. The prices also increased substantially on Chattogram-based shipbreaking yards which supply the rest proton of the scrap to rod mills.
Another reason is the dollar crisis, which caused a significant cut in raw material imports in recent times, they said and added that price hikes of fuel oil and electricity also contributed to the rise.
"The rod-making industries have been in a severe crisis since the beginning of the Russia-Ukraine war. The dollar crisis caused a continuous fall in our raw material imports. We now cannot open letters of credit," said Mohammad Sarwar Alam, director of HM Steel and Industry.
The imports of raw materials have come down to only 20% of the demand, as a consequence, he told The Business Standard. "If the situation does not improve, there will soon be an acute shortage of raw materials."
"The price of scrap was on a decline in the global market at the end of the last year, but we could not capitalise on that due to the dollar crisis. In the meantime, the scrap price started increasing again," he said and noted that rod-makers are now in a survival fight.
Industry insiders said they are now buying scraps from shipbreakers at Tk68,800 per tonne, which was just Tk61,000 a week ago. Besides, the global scrap prices reached $470-490 per tonne this week from $430 in November last.
The prices of a tonne of billet soared to Tk82,000 from Tk74,000 and plate to Tk76,000 from Tk72,000 over the last week, they added.
"Although the rod market saw a drop in prices for the last three months, it was almost unstable for the past two years. Price hikes of scraps on the international market, dollar crisis and energy price hikes are obviously the reasons, but market manipulation was also in place," said SM Kamruzzaman, proprietor of Chattogram's Asadgate-based Zaman Enterprise.
Chattogram once had some 50 rods manufacturers and most of them closed their production over the past few years, he told TBS. "Now only 10-12 companies are controlling the entire market," he added.
