Rod prices drop as rains dampen demand
The price of mild steel (MS) rod of grade 60 has gone down slightly since Thursday thanks to a decline in demand due to a slowdown in construction and physical infrastructure development works for the monsoon rains.
According to the Trading Corporation of Bangladesh, each tonne was retailing at Tk 99,500 on Thursday whereas earlier it was Tk 101,500.
"Demand has come down due to the rains," said Tapan Sengupta, deputy managing director of Bangladesh Steel Re-Rolling Mills Ltd (BSRM).
"…all construction work including government projects under annual development programme have been going slow since the start of the rainy season. For this reason, manufacturers have reduced the price," he said.
Just four months ago Bangladesh's construction sector was facing challenges due to frequent hikes in the price of MS rod and other major construction materials while slow development activities put many workers out of a job, according to industry people.
The price of MS rod crossed Tk 1 lakh per tonne in March for a rise in production costs fuelled by increasing fuel and energy prices amidst a US dollar crisis.
If bought directly from the company, the prices are even lower, around Tk 95,500 to Tk 97,500 per tonne, said Sengupta.
There is scope to reduce the price further as scrap iron, the raw materials for making steel, had now become cheaper, around $430 per tonne, whereas earlier it was $560 in the international market, he said.
However, with restrictions on opening letters of credit (LCs) yet to be withdrawn, manufacturers still cannot import the low-priced scrap iron, he said.
Kabir Steel Re-Rolling Mills Ltd (KSRM) is offering each tonne at Tk 96,000 at the mill gate whereas earlier it was Tk 97,000 crore, said Md Jashim Uddin, director (sales and marketing).
He believes the price would continue to go down throughout the rainy season, which lasts until October.
However, there will be no significant change in prices as the manufacturers cannot avail the low-priced scrap iron for the restrictions on opening LCs, he said.
Prices have gone down owing to low demand and a reduction in the price of scrap iron in international markets, said Abu Jubaid Md Rassel, head of marketing at Anwar Ispat.
"During rainy season in Bangladesh the demand for steel slightly goes down while development activities of the government go slow. For this reason, demand for steel declined and price has also come down," he said.
According to him, prices at the mill gates were ranging between Tk 95,500 and Tk 97,500 depending on the brand.
The downtrend will continue until October with the demand reducing by at least 30 per cent, he said.
The government purchases over 40 percent of the industry's steel and the reduction in development spending amidst the economic crisis understandably will have an effect steel consumption, he said.
However, the price will not fall drastically as had been during the pandemic, he said.
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