Ship breakers hike scrap prices on flimsy grounds
Jasim Uddin Haroon | Saturday, 7 March 2009
The prices of mild steel rod (MS Rod) soared again by around Tk 7,000 a tonne over the past few weeks, dealing a blow to construction, which picked up recently after a gap of two years.
Currently the price of 40-grade MS rod is Tk 48,000 and 60-grade Tk 52,000-Tk 53,000 a tonne.
A few weeks back, the prices of 40-grade MS rod ranged between Tk 40,000 and Tk 41,000 and 60-grade Tk 47,000-Tk 48,000 a tonne.
In the last two years the construction sector suffered a debacle mainly due to the then government's anti-graft drive. Besides, prices of building materials also skyrocketed due to high prices in the international markets.
Rod manufacturers, however, said they have increased the prices of MS rod, a prime construction material, mainly due to the rise in prices of ship scraps.
'Rod prices increased mainly because of the rise in prices of ship scraps,' said Sheikh Masudul Alam, proprietor of Shariari Re-rolling Mills.
MS rod is a major construction material, manufactured from both ship scraps and imported melting scraps.
Ship scrap is now being sold at Tk 34,000 a tonne against Tk 28,000 a tonne few weeks back, re-rolling mill owners claimed.
Currently, the prices of melting scraps range between $320 and $325 a tonne.
Mr Masud, also founder secretary of Bangladesh Re-rolling Mills Association (BRMA), told the FE, 'We all incurred losses over the past two years as manufacturers sold rod simply to run factories amid a slowdown in the country's real estate sector.'
Zafar Ahmed, president of Bangladesh Ship Breaking Association, told the FE that they increased the prices of ship scraps on shortage of oxygen supply and labour.
'We have an adequate number of old ships, but due to lack of labour and oxygen we cannot cope with the increased demand for ship scraps,' Zafar added.
Mr Zafar also claimed that the international prices of old ships also rose in the recent weeks. But the situation in the international market tells a different story. Over supply of ships ready for breaking has pulled down their prices. More than 600 ships, each weighing between 10,000 tonnes and 30,000 tonnes, are available for breaking.
Md Bashir Ullah, general secretary of Bangladesh Steel Mills Association, told the FE, they prefer ship scraps as those are easily re-rollable.
'I think the market is okay as it has reached the current point after rise and fall in prices of rod,' Mr Bashir added.
Melting scrap requires an investment of at least Tk 10,000 for manufacturing billet, the main ingredient for making MS rod.
Tanveerul Haque Probal, president of REHAB (Real Estate and Housing Association of Bangladesh) told the FE: 'We don't understand the trend of MS rod market, its illogical prices just create troubles for us.'
He also said the prices of MS rod should be between Tk 40,000 and Tk 42,000 a tonne.
Mr Tanveer claimed that prices of all rod ingredients were falling.
Bangladesh's more than 100 re-rolling mills are producing around 2.5 million tonnes of rod with the construction sector accounting for 10 per cent of the country's GDP. The sector grew at around 10 per cent annually until 2006.
Currently the price of 40-grade MS rod is Tk 48,000 and 60-grade Tk 52,000-Tk 53,000 a tonne.
A few weeks back, the prices of 40-grade MS rod ranged between Tk 40,000 and Tk 41,000 and 60-grade Tk 47,000-Tk 48,000 a tonne.
In the last two years the construction sector suffered a debacle mainly due to the then government's anti-graft drive. Besides, prices of building materials also skyrocketed due to high prices in the international markets.
Rod manufacturers, however, said they have increased the prices of MS rod, a prime construction material, mainly due to the rise in prices of ship scraps.
'Rod prices increased mainly because of the rise in prices of ship scraps,' said Sheikh Masudul Alam, proprietor of Shariari Re-rolling Mills.
MS rod is a major construction material, manufactured from both ship scraps and imported melting scraps.
Ship scrap is now being sold at Tk 34,000 a tonne against Tk 28,000 a tonne few weeks back, re-rolling mill owners claimed.
Currently, the prices of melting scraps range between $320 and $325 a tonne.
Mr Masud, also founder secretary of Bangladesh Re-rolling Mills Association (BRMA), told the FE, 'We all incurred losses over the past two years as manufacturers sold rod simply to run factories amid a slowdown in the country's real estate sector.'
Zafar Ahmed, president of Bangladesh Ship Breaking Association, told the FE that they increased the prices of ship scraps on shortage of oxygen supply and labour.
'We have an adequate number of old ships, but due to lack of labour and oxygen we cannot cope with the increased demand for ship scraps,' Zafar added.
Mr Zafar also claimed that the international prices of old ships also rose in the recent weeks. But the situation in the international market tells a different story. Over supply of ships ready for breaking has pulled down their prices. More than 600 ships, each weighing between 10,000 tonnes and 30,000 tonnes, are available for breaking.
Md Bashir Ullah, general secretary of Bangladesh Steel Mills Association, told the FE, they prefer ship scraps as those are easily re-rollable.
'I think the market is okay as it has reached the current point after rise and fall in prices of rod,' Mr Bashir added.
Melting scrap requires an investment of at least Tk 10,000 for manufacturing billet, the main ingredient for making MS rod.
Tanveerul Haque Probal, president of REHAB (Real Estate and Housing Association of Bangladesh) told the FE: 'We don't understand the trend of MS rod market, its illogical prices just create troubles for us.'
He also said the prices of MS rod should be between Tk 40,000 and Tk 42,000 a tonne.
Mr Tanveer claimed that prices of all rod ingredients were falling.
Bangladesh's more than 100 re-rolling mills are producing around 2.5 million tonnes of rod with the construction sector accounting for 10 per cent of the country's GDP. The sector grew at around 10 per cent annually until 2006.