The price of mild steel rods (MS rod) has surpassed all records, increasing by Tk7,000 per ton in just two weeks.
Industry insiders said the price of rods has gone up due to the increased prices of scrap and billet, the raw materials for making rods, in the domestic and international markets.
Mohammad Jasim Uddin, general manager (sales) of KSRM Group, said, "The main reason behind the rising rod prices is the increased prices of scrap and booking prices of scrap ships in the international market. From July to September in 2020, the price per ton of scrap in the international market was $265-270, but at present, the booking price of scrap is over $600.
"That means the price of scrap has almost doubled, but we could not double the price of rods considering the mega projects of the government and the affordability of the buyers. We are selling the product at a price fixed in coordination with the production cost," he added.
According to the wholesalers of MS rods, at present, 75-grade rods of different brands are being sold at Tk74,000-Tk78,000 in the market, which was sold at Tk67,000-Tk73,000 two weeks ago.
Meanwhile, besides the rod, the prices of billets, plates and scraps, the raw materials for making rods, have also gone up abnormally. At present, per ton of scrap is being sold at Tk55,000, plate at Tk60,000 and billet at Tk66,000. Two weeks ago, scrap was sold at Tk50,000, plate at Tk56,000 and billet at Tk60,000-Tk61,000.
According to traders in the steel sector, the country's construction sector, like other sectors, became stagnated since the beginning of the pandemic in March 2020. After 5-6 months of stagnation due to the pandemic and the monsoon, the construction sector started to recover from November 2020. Since then, the demand for MS Rod has been rising continuously.
SM Kamruzzaman, a wholesale rod trader at Asadganj in Chattogram and also the proprietor of Zaman Enterprise, said, "Factory owners have been raising the rod prices due to increasing demand. Since last November, the price of the product started to increase step by step. In the last one year, the price of rods has increased by Tk25,000 per ton at the wholesale or mill level."
However, the factory owners said that the price of rod-making raw materials, scrap and billet, has increased by Tk20,000-Tk25,000per ton in the domestic and international market in the last year. As a result, they are being forced to increase the price of rods due to increased production costs.
Sarwar Alam, director of Golden Ispat, said the raw material of the country's steel industry is 100% dependent on imports. Around 75%of billets are imported directly and the remaining 25% comes from the ship-breaking sector. The price of rod-producing raw materials has increased in the domestic and international markets.
He said, "In February-March last, the booking price of scrap in the international market was only $460-$470 which has increased to $600 at present. Similarly, the price of scrap in the domestic market in November last year was Tk30,000-Tk35,000 per ton, which is currently being sold at Tk54,000-Tk55,000."
In other words, due to the increased prices of raw materials of the steel industry in the domestic and international market, the price of MS rods is increasing, he concluded.