Strong dollar further pushes up MS rod price

Badrul Ahsan MS (Mild Steel) rod prices have surged as traders and manufacturers have attributed the hike to a rising dollar, which has gained 10 per cent over the last one year. The current selling rate of dollar hit Tk 76-79 in the kerb market, which was Tk 72 six months back, according to central bank data. Traders say the average prices of the key construction material increased by about Tk 3,000 to 4,000 per tonne in the past two weeks. "The prices of both 60-grade and 40-grade rod have surged significantly 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 58,000 against Tk 54,500 in Dhaka's retail market. He said that potential buyers are turning away from purchasing the materials following the rise in prices. Steel manufactures, however, blamed higher exchange rate between dollars and Taka for the increase in rod price. They also said they have been facing troubles while opening letters of credits (LCs) in the banks. 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. 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-based small units are facing serious problems due to the soaring prices of the item in the recent times. "The price-hike of MS rod has made the construction sector wobbly," president of Real Estate and Housing Association of Bangladesh (REHAB) Nasrul Hamid Bipu told the FE. He feared that if the prices continue to climb, it would wreak a further havoc on the real estate sector. Tanveerul Haque Probal, managing director of Building for Future, said the cost of building apartments has surged by nearly 30 per cent due to the rise in MS rod prices. "Many of the realtors, especially those with a low capital base, are now considering slowing down their construction work," he added. "This is the single most expensive item. An increase in prices of rods has a significant impact on project costs," said Shahriar Kamal, deputy managing director of Concord Group of Companies. "Any problem in this sector, therefore, has a direct bearing on the employment of 2.5 million day labours, masons, carpenters and other workers in this field," Mr Kamal added. Ship breakers have already pushed up price of melting scrap by over 10 per cent in a month, according to the Bangladesh Auto Re-rolling and Steel Mills Association (BARSMA). "High price of billet in the international market and melting scrap in the ship breaking yard might cause the MS road market more volatile during the pick season," President of BARSMA S K Masadul Alam Masud told the FE Saturday. Bangladesh's annual demand for quality rod is estimated at over 2.5 million tonnes. Chittagong-based BSRM Group is leading the market, controlled by 10-12 players.