The price of MS rods in the steel market has gone up by up to Tk4,000 per tonne within a week with traders complaining that despite adequate production and stocks in factories, manufacturers have capitalised on the increased demand.
Manufacturers, however, cited increased price of raw material scrap for rod production in international and domestic markets as the reason for the steel price hike.
According to traders in the steel sector, the country's construction sector, like others, has been stagnant since 26 March owing to Covid-19.
After five to six months of stagnation due to the pandemic and monsoon, the construction sector started recovering from October onwards. With supply exceeding demand thus far, the price has been stable.
But from November onwards, the demand started to increase again, and the price of MS Rod shot up since the middle of the month.
SM Kamruzzaman, the proprietor of Zaman Enterprise in Asadganj, a wholesale rod market in Chattogram, said there was ample stock of rods in the factories. Even then, the mill owners have increased the price of rods by capitalising on the demand to boost profits.
However, Sarwar Alam, director of Golden Isphat, said the market for raw material scrap for rod production has grown in domestic and international markets.
Earlier this month, we bought a tonne of scrap from the international market for $310, which is $370 locally. Similarly, the price of scrap in the domestic market at the start of this month was Tk29,000-30,000 per tonne, which is now sold at Tk35,800-36,000.
He added that since the steel sector has not yet been able to recover from the recession that occurred during the pandemic, steel mills are still selling rods at prices lower than production cost. For instance, at this time last year, rod was sold at least Tk3,000 more than current levels.
Currently, there are four qualities of MS rods: 75 grade, made in state-of-the-art technology or auto factories, 60 grade, made in semi-auto factories, general grade or 40 grade, and rods known as Bangla rods, without any seals or grades.
The price of 75-grade (500 watts) rod has increased exponentially in the last two days in two phases, from Tk3,000 to Tk3,500 per tonne. Yesterday, 65-grade rods of different brands were sold in the market at Tk55,000-59,000.
On Sunday, amongst the different brands in the market, 75-grade BSRM was sold at Tk59,000, AKS and KSRM at Tk55,000, GPH at Tk54,000 and Golden Steel at Tk53,500.
On Thursday, BSRM was sold at Tk55,500, AKS and KSRM at Tk53,000-Tk53,500 and GPH, Golden Steel and Tk52,500-Tk52,500.
However, the market for semi-auto, general grade and Bangla rods has been on the rise since last week. Meanwhile, the price of the 60-grade rod of Semi-Auto Mill has jumped from Tk48,000 per tonne to TK52,000 in a week.
At the same time, the price of an ordinary 40-grade MS rod has increased by Tk3,000-4,000 to Tk48,000, which was selling in the market for Tk44,000-45,000 a week ago.
In the last one week, the price of Bangla rod was Tk3,000 per tonne, and it is now selling at Tk45,500-Tk46,000.