MS rod, cement prices continue to spiral up

Badrul AhsanA rising dollar, energy crisis and higher transportation costs have pushed up prices of basic construction materials including MS rod and cement, traders and manufacturers say. They say that US dollar has gained almost 10 per cent over the last one year while supply crunch of gas and electricity is disrupting production of factories over the years. The government's recent move to hike prices of furnace oil has also contributed to the significant rise in higher costs of transportation. Last month, the government raised the prices of petroleum products by 6.32-19.04 per cent in an attempt to cutback the growing losses of state-owned oil companies. "The prices of both 60-grade and 40-grade rod have surged over the last few weeks," said Mollah Hasan, a trader at city's English Road, told the FE. Traders said per tonne 60-grade MS rod is selling at Tk 64,000 against Tk 60,000 and 40-grade at Tk 59,000 against Tk 54,500 in the city's retail market. They noted that the average prices of the key construction material MS (Mild Steel) rod increased by about Tk 3,000 to 4,700 per tonne in the past two week. Cement price also went up by around Tk 20 per bag and prices of different category of sand also increased by around 25 per cent, according to traders. Mr Hasan said potential buyers are turning away from purchasing the materials following the rise in prices. Steel manufactures and cement producers, however, blamed higher exchange rate between dollars and local currency for the increase in rod and cement prices. They also said they have been facing trouble while opening letters of credits (LCs) in the banks due to the higher exchange rate. M Rahman, chairman of steel maker RSRM, said the price of MS rod has increased mainly due to high exchange rates of greenback, which gained 10 per cent over the last year. Local manufacturers need to purchase billets or scraps from overseas market and use ship breaking plates to make non-grade rods. President of Bangladesh Cement Manufacturers Association (BCMA) Mustafa Kamal said that the import cost of raw materials, particularly clinker, has slightly gone up in the international market. "Price of clinkers has gone up by over 5 per cent in the international market within a month. Besides, high cost of US dollar against taka has increased cost of raw materials," Mr Kamal said. "I think manufacturers may raise cement prices as a result." Mr kamal also said low pressure and disruption in gas supply have been affecting cement production for a long. The price spike came much to the dismay of the entrepreneurs of real estate and construction sector, which has slumped in recent times. The construction sector and other rod and cement based small units are facing serious problems due to the soaring prices of the items in the recent times. President of Real Estate and Housing Association of Bangladesh (REHAB) Nasrul Hamid Bipu recently said the price-hike of basic construction materials has made the construction sector wobbly. In a recent interview, Tanveerul Haque Probal, managing director of Building for Future, said realtors, especially those with a low capital base, are now considering slowing down their construction work.