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Bangladesh - September 19, 2022

Construction materials at highest price in history

Hits development works

Mahfuja Mukul: The dollar rose by more than 30 percent in a few months in the country. Suddenly, the price of diesel also increased by 42 percent. The construction sector of the country has been the direct victim of these two price hikes. Rod, one of the construction industry’s most important materials, has reached an all-time high due to rising fuel and dollar prices. His companion is cement. Because the raw material scrap for rod making and clinker raw material for cement production are all imported in the country. It has to be paid in dollars.
A month’s market review after talking to rod-cement dealers, mill owners and related senior executives showed that MS rod is currently being sold at Tk 90,000 to 92,300 per tonne. Rod prices have never been so high before. Even a month ago these rods were Tk 85-86 thousand. Again, cement is being sold at Tk 500-530 per bag of 50 kg. Earlier last March, the price of cement rose up to Tk 520. But a month ago, these cements were Tk 400-420. Akil Ahmed, a rod-cement trader in Baklia area of
Shah Amanat Bridge-Bahaddarhat connection road of Chittagong city, told that the price of rod-cement is increasing in the market. Within a month, the price of rods has increased by Tk 5-8 thousand per ton. He said, currently BSRM brand MS rod is selling at 92 thousand 300 taka, KSRM rod at 90 thousand 500 taka, AKS 91 thousand 500 and GPH at 91 thousand taka.
Jaydev Saha, Manager of Ruby Trading in Moizartek area, told that there is currently no cement below Tk 500 in the market. The price of cement has increased by Tk 100-120 per bag of 50 kg in a month. Currently, the price of rod-cement is increasing due to rising dollar and fuel oil prices. Because of this, sales have decreased.
Pottery businessman Latifur Rahman Babu said that there is currently instability in the price of rod-cement in the market. He said that the price of cement has increased by Tk 120-130 per bag in a month. Ruby cement of Tk 430 is now selling at Tk 530. Diamond cement is being sold at Tk 520. A month ago, it was Tk 420. But the price of premier cement is slightly lower. Premier cement is being sold at Tk 490-500.
When talking about this, the general manager of Royal Cement, Abul Mansoor, told on Sunday afternoon, now the price of the dollar has increased by 22-25 percent. Earlier I used to pay Tk 84-85 as dollar payment. Now that dollar went up to Tk 110-112. Moreover, the price of cement raw material has not decreased. Earlier clinker was available at 40-42 dollars, now the price of that clinker is above $65.
Now due to the increase in fuel oil prices, the cost of transporting cement from factories has also increased. Only transport cost per bag of cement has increased by Tk 10-15. All in all, the market has been affected. Due to this, on the one hand, the price has increased, on the other hand, the demand has decreased. People have stopped construction work due to increase in the price of rod-cement.
Golam Kibria, General Manager of Premier Cement, told that the raw materials of the cement industry are almost entirely dependent on imports. At present there are 35 cement factories in the country. 34 of them import clinker and produce cement. If one bag of cement costs Tk 500, raw material costs Tk 400. Not only cement, but all import-dependent industries are affected by the rate at which the dollar has increased.
Citing an example, he said, “We recently paid the price of an LC at the rate of 112 taka 50 paise per dollar. Over taka two crore 90 lakhs loss has to be paid in that LC. Now the taka has depreciated by about 29 percent. It has an impact on production. Now the price has increased by Tk 70-85 per bag only due to the increase in dollar value. Again, due to the increase in the price of fuel in the international market, the price of bunkering has increased all over the world. It also increases the ship fare. Import cost of clinker has gone up.
The increase in diesel prices in the country has also had a direct impact on this sector. This official of Premier Cement said that due to the increased price of diesel, the rent of trucks and lighter ships has increased.
He said, another reason for the increase in the price of cement is the increase in the price of diesel in the country. Due to increase in diesel prices, lighterage charges for lighterage from mother vessels have also increased. I have calculated that the cost of lightering has increased by more than Tk 100 per ton.
The executives of the country’s rod manufacturing companies also say that the increase in the dollar and the increase in the price of scrap in the international market has set a record in the price of rods in the country. Now some are forced to stop production and some are continuing the business even with losses.
Almas Shimul, Additional Managing Director of GPH Ispat, the country’s top rod producer, told that steel industry entrepreneurs have suffered more losses due to the rise in dollar prices. Scrap is imported on Deferred Payment LC (Pay Later). Due to deferred LC we pay the LC price after 6 months of import. 6 months ago, the value of the dollar was Tk 89. As such, I have sold the rods produced by casting.
Now the dollar has become Tk 112. In this, we have to pay a loss of Tk 18 to 22 per dollar. To pay 500 dollars per ton of scrap, I had to pay Tk 10 thousand more. Almost everyone who deals in iron works with deferred payment LC. It has caused great damage to almost everyone.
He also said that due to the increase in the price of fuel oil, the cost of ships has increased in the world market. Again, with the Ukraine-Russia war reaching a point, we expected scrap prices to drop. But it has increased instead of comma. Now scrap is being bought at $470-480 per tonne instead of $420.
Stating that the sales have decreased due to the increase in the price, this businessman said that the rate at which the price of rods is increasing internationally, the customers are not able to bear the burden. Due to which many have stopped their construction work. Also, due to the unstable market, even the small factories of the iron industry are not able to handle the pressure. Except for a few, others are unable to do LC. They did not do LC in the hope of lower prices in the international market. Now they are suffering losses.
He claimed that now every ton of rod is costing about Tk one lakh. In this regard, he said, if the production in the factory is stopped now, the loans of the banks cannot be regularized. This will deteriorate the relationship between the bank and the factory owners. That’s why now I am selling the goods even at a loss.

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