Prices of all types of construction materials have increased significantly despite poor demand in the face of ongoing political turmoil mainly due to the unholy activities by mill authorities and the wholesalers, retailers and users said.
According to different market sources, price of all grades of mild steel (MS) rods increased by around 25 per cent within a month. On the other hand, price of a bag of cement of all brands increased by 30 to 35 taka at the same time.
Real estate and construction sector insiders blamed the mill authorities and wholesalers for the abnormal price hike 'through syndication.'
Mollah Hasan, a trader at city's English Road area said the price of both 60-grade and 40-grade rods rose abnormally within the last one month.
According to the trader, a tonne of 60-grade and 40-grade MS rod is selling at Tk 66,000 and Tk 59,000 in the city's retail market which was Tk 53,000 and Tk 48,500 a month ago.
On the other hand, each bag of cement is being sold between Tk460 to Tk470 depending on brands which was Tk 35 to Tk 40 less at the beginning of October.
Mr Hasan said many potential buyers are turning away from purchasing construction materials following the rise in prices. "There is no justification for this sudden price hike. I think there is a syndication," he said.
"The price of the items increased at the start of the season. Our assumption is that the prices would increase further," he informed.
However, the re-rolling mill authorities and cement producers rejected allegations of syndication. They attributed the 'slight price hike' to higher production cost due to the ongoing political turmoil and increased prices of raw materials in the international market.
"The ongoing political turmoil has badly affected our regular production. Raw materials supply to our factories has been disrupted. Transport cost of our goods has increased forcing the millers to increase prices of MS rods slightly," Sahriar Steel Mills Ltd Managing Director Sheikh Masadul Alam Masud told the FE Monday.
According to him, millers increased prices of each tonne of MS rod by around Tk 5,000 to 7,000 but the retailers said they bought a tonne of rod at around Tk 13,000 higher than what they purchased a month ago from the wholesalers.
Mr Masud, also the president of Bangladesh Auto Re-Rolling and Steel Mills Association (BASMA), said demand for MS rod decreased by around 30 per cent in its peak season due to the present political situation thus pushing overhead cost of MS rod significantly.
"October-May is the peak time of business for the sector. Producers do over 70 per cent of their yearly business during this time, but due to the ongoing political turmoil their sales have dropped by over 30 per cent," he added, justifying the price hike by the millers.
However, Bangladesh Cement Manufacturers Association (BCMA) President Mostafa Kamal said slower investment by the private sector ahead of general election and political chaos left a negative impact on construction industry.
The price of clinker, the main raw material of cement production, increased by around US$4.0 against a tonne, he said.
"We could buy a tonne of clinker at $54 to $ 60 three months ago but now we have to buy those at $58 to $ 65, which pushed up our production cost. Besides, transport cost increased by at least 40 per cent recently. "I think manufacturers may increase cement prices as a result," Kamal added.
"Higher production cost has forced the millers to increase prices. Mill owners are not engaged in any syndication. Either the wholesalers or the retailers are responsible for the market condition," he added.
The price spike has come much to the dismay of the of real estate and construction sector entrepreneurs.
"The construction sector and other rod and cement based small units are facing serious problem due to the soaring prices of the items in the recent days," President of Real Estate and Housing Association of Bangladesh (REHAB) Nasrul Hamid Bipu recently told the FE.
"Our business has slumped. The price-hike of basic construction materials has made the construction industry unstable," he said.
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