Rat-cat game over strong branded rod prices

Construction works of pvt and govt sectors hit hard

Golam Mostafa Jibon: A rat and cat game is going on in the rod market of the country as a syndicate has increased the prices of all strong branded rods with a view to create an anarchy in the market that seriously hits development sector.
In this circumstance, development activities in both the government and private sectors have almost halted due to adding additional costs. Many developers especially from real estate sector are now in depression over the rod prices. They are apprehending that the prices may be increased further hampering the construction activities, if the necessary steps are not taken right now by the authorities concerned. Besides, they urged the government to beef up monitoring in the market.
Strong brands are shaking up the rod market. Those brands are behind the increasing of prices much more than the comparatively weaker brands. As a result, consumers are being affected severely. The government organization Bangladesh Trade and Tariff Commission said that, if the difference between the highest price and the lowest price can be reduced, the price will be reduced by Tk 2,000 to Tk 3,000 per ton of rod at the consumer level.
Apart from this, if the difference between producer price and maximum price is reduced, the price can be reduced by Tk 5,000 to Tk 8,000. These issues have come up in the Tariff Commission’s review report on prices and market conditions of daily necessities.
According to the report, in the month of September, the price of Abul Khair steel per metric ton rod was Tk 89,200. Anwar Steel price was Tk Tk 85,900, Baizid Steel rod price was Tk 86,500, BSRM price was Tk 89,560, GPH Steel was Tk 89,300, KSRM was Tk 86,200, Metrocem Tk85,000 and Mohammadi Steel was
Tk 80,600, while the price of Rahim Steel was Tk 87,500 and Shahriar Steel was Tk 87,300 per metric ton rod.
A review of the market price data of 60 grade MS rod per metric ton in the local market from last May to October shows that the highest price of per metric ton rod at the beginning of May 2022 was Tk 90,000 and the lowest price was Tk 87,000.
After that, it increased to Tk 91,000 in June. Although there was a slight decrease in July and August, the maximum price in the local market continued to increase from September.
According to the report of the Tariff Commission, the reason for the increase in prices is that the maximum price is not increasing as much as the minimum price is increasing.
It appears that weak brands of MS products are not increasing their prices as much as the stronger brands in the market are increasing their prices.
In addition, the import price of MS scrap, the main raw material of MS products, has decreased, but the feature in the local market is opposite. As a result, consumers are suffering in general.
In September, the lowest production price per metric ton of rod was Tk 85,000 and the highest price was Tk 89,560. Considering the cost of production, the difference in price per metric ton from the maximum retail price is Tk 5,000 to Tk 8,000.
Reducing the difference between the producer price and the maximum retail price will reduce the price of MS products in the local market. Although, the price of dollar and import price has decreased, it has not affected the country’s market.
According to the Tariff Commission report, the average import price of scrap in June was $ 590 per metric ton. It fell to $ 521 in September. According to its average import price, the price of scrap per metric ton fell by more than 11 percent. Apart from this, the exchange rate for payment of import expenses was Tk 108 to Tk 112 per dollar in June. Currently, the exchange rate per dollar is Tk 101 to Tk 105.
According to the Tariff Commission, there has been a downward trend in the scrap price of MS products in the international market. Accordingly, local importers have opened LCs in August and September for import of scrap.
The lead time of importing all these products is 2 to 2.5 months. Considering the lead time, in November 2022, the marketed price of MS products can be monitored for adjusting the price according to the local import price, if LC products enter the country at a lower price in November 2022.
Advance income tax on import of MS scrap, raw material used in production of MS products can be reduced from Tk 500 to Tk 300 and sales tax from 2 percent to 1 percent at sales level.
These institutions will not be affected, if the price of rods is reduced in the local market. Note that, the journey of steel mills in Bangladesh started in 1952.
At present, the demand for MS products in the country is about 7.2 million metric tons and the production capacity is about 9 million metric tons.
A few big mills in the country supply 50 percent of the total demand. The products manufactured by these mills are TMT bar, flush steel and stainless steel and TMT bar is the most widely used steel in the country. Based on demand, 60 percent of the steel is used in government sector, 25 percent in households and 15 percent in commercial construction sector.