Home ›› 10 Mar 2022 ›› Front
The recent sharp rise in the prices of basic construction materials, such as rod, cement, and sand, has pushed housing costs up, with realtors saying this has forced them to suspend many projects due to budget crunch.
They also say the messy situation is the result of the coronavirus pandemic fallout, raw material price hikes in the global market, and the ongoing Russia-Ukraine crisis.
They fear the situation may deteriorate further. Real estate developers and the relevant backward linkage businesses recently urged the government to reduce duties on the import of raw materials in the upcoming budget for the fiscal year 2022-23, saying this will keep prices in check.
Rod prices skyrocket
Traders in the capital said they now sell different types of rods for Tk 85,000-89,000 per tonne and prices increased by Tk 10,000-12,000 per tonne in just two months.
They fear prices may jump to Tk 1 lakh per tonne soon due to supply crunch. Talking to The Business Post, owner of Bhander Traders in Old Dhaka Saidul said he sells BSRM rod at Tk 89,000 per tonne. “BSRM rod is in great demand among customers. We sell AKS and Bandor rods at Tk 85,000 per tonne,” he said. BSRM Steels latest annual report says the company’s net profit increased by around 312 per cent in a year – from Tk 74 crore in FY20 to Tk 305 crore in FY21.
Talking to The Business Post, BSRM Deputy Managing Director Tapan Sengupta said the company was incurring losses in rod sales.
He said raw material prices had gone up in the international market but rod prices were lower in Bangladesh compared to India.
“Bangladesh depends on imported scrap materials. Rod prices will come down if raw material prices fall in the global market.”
Kabir Ahmed, senior manager of Al-Amir Traders in Badda, said high-quality rod is sold at Tk 89,200 per tonne in the retail market and prices may reach Tk 90,000 per tonne by the second week of March.
“We are suffering due to supply shortages. I think prices will hit Tk 1 lakh per tonne soon,” he said.
He further said traders did not have a hand in the price hike. “Local prices depend on the international market rate. We purchase rod from manufacturers, and they are responsible as well.”
Bangladesh Steel Manufacturers Association President Manwar Hossain urged the government to cut VAT on per metric tonne rod, from Tk 2,000 to Tk 500, imposed on billet and rod manufacturers.
He said this would help control the skyrocketing prices of this key construction material.
Manwar also urged the government to decrease VAT on MS rod producers from Tk 1,000 to Tk 250 per metric tonne in the upcoming national budget.
Cement prices rise by Tk 20
The price of a 50kg sack of cement increased by up to Tk 20 compared to the first week of March due to supply shortages, said retailers.
Proprietor of Muktijoddha Traders in Demra Shahab Uddin said he sold a sack of Fresh Cement at Tk 430 in the second week of March, which was Tk 410 in the first week.
Nur-e-Alom, proprietor of Taiyaba Enterprise at Mir Para area of Demra, said he sells Premier Cement at Tk 420, Tiger Cement at Tk 430, Seven Rings Cement at Tk 435, Akij Cement at Tk 440, Crown Cement at Tk 450, and Holcim Cement at Tk 460.
“The prices of most cement brands increased by Tk 10-20 in a week. Wholesalers do not supply products properly. What can we do?” he said.
Bangladesh Cement Manufacturers Association Vice President Md Shahidullah urged the government to reduce customs duty on per 100 metric tonnes of clinker to Tk 200 from Tk 500.
“We have to import all raw materials, such as clinker, gypsum, slag, fly ash, and limestone, to manufacture cement. We request the government to cut advance income taxes on all raw materials to 2 per cent from 3 per cent in order to reduce retail cement prices,” he added.
Sand prices soar by Tk 500
In addition to rod and cement, sand prices have also gone up, with traders saying a lack of monitoring by the government has led to this situation.
Proprietor of Mokbul Enterprise in Demra’s Amulia Saiful Islam said he sells bhiti balu (smooth grain sand) at Tk 13,500 per truck (150 feet) and astar balu (sand used for plastering) at Tk 4,000-4,200 per truck (150 feet).
“Sand prices have gone up due to high demand and less supply. Transportation costs have also increased vastly. There is no way to decrease sand prices,” he also said.
According to Bangladesh Sand Mining and Merchants Association, the sand market has grown to Tk 700-800 crore from around Tk 400-450 crore five to six years ago, with a 10-15 per cent annual growth.
Talking to The Business Post, Stone and Sand Traders Association General Secretary Jahangir Alam said three types of sand – bhiti, astar and dhalai (sand used in concrete) – are used most widely in Bangladesh.
He said the use of sand increased vastly due to mega projects, such as the Padma bridge, metro rail, highways, and economic zones.
Sand is mostly brought from Chandpur, Paksey, and Sylhet, he said.
“Extortion on naval routes is a big challenge for sand traders. Sand costs have risen due to extortion and high transportation costs. The government should deal with extortionists first to control prices,” he added.
Need for regulatory body
Real Estate and Housing Association of Bangladesh Vice President Kamal Mahmud said a regulatory body is needed to set and control construction material prices.
“As we do not have such a regulator, traders increase and decrease prices at will. The regulator should inform the people at least two weeks in advance if prices go up or down. It should also follow a formal process to raise or reduce prices,” he said.
“Some rod manufacturers claimed the Russia-Ukraine crisis had impacted prices in the global market, but I think this is a lame excuse. I think a syndicate of manufacturers is behind the price hike,” Kamal further said.
He also urged the commerce ministry to take an initiative to regulate prices.
