Realty sector hit as short supply pushes steel prices up

A sharp surge in steel bar prices in the local markets of Chattogram in recent months, triggered by supply chain disruption, has dealt a big blow to Bangladesh's realty sector.

Though the price of steel bars -- a key raw material in the construction sector -- nosedived due to fall in demand soon after the Covid-19 lockdown, it started rising on the back of hike in industrial activity, post-unlock.

Steel bars or mesh of steel wires are used as a tension device in reinforced concrete and reinforced masonry structures to strengthen the construction and aid the concrete under tension.

While realtors blame the steel rod traders for superficially increasing the prices in the wake of rising demand during the construction season, the latter attributes the hike to shortage of scrap supply from Chattogram's ship-breaking industry.

UNB recently carried out a reality check and found that four types of steel rods were being sold in the markets of Chattogram.

While grade 75 steel is produced in auto factories using modern technology, grade 60 is manufactured in semi-auto factories and grade 40 in general factories.  Another steel bar, known as ‘Bangla rod’ is also available in the local markets.

Grade 75 steel, which was Tk 50,000-55,000 a tonne just a week back, now costs Tk 55,000-60,000 a tonne, UNB found.

Currently, Bangladesh Steel Re-Rolling Mills, locally known as BSRM, is selling steel rods at Tk 60,000 per tonne, while the price of AKS and Kabir Steel Re-Rolling Mills (KSRM)-brand rods is Tk 56,000 a tonne.

When contacted, Shahrier Zahan Rahat, deputy managing director of KSRM, said, “Steel scrap crisis has fuelled a rise in steel bar prices. The price of one tonne scrap is available at USD 390, which was $300 in last month."

The top steel firm executive also stressed the need for fixing the price of rods in coordination with international markets, "otherwise the steel sector in Bangladesh will come to a standstill".

SM Kamruzzaman, owner of M’s Zaman Enterprise, a wholesale trader in Azadganj, said “The price of steel rods has increased manyfold in the last 10-12 days. On an average, the price of a ton has increased by Tk 4,000 to Tk 5,000.”

“The demand for rods has increased in the construction season and every year, the businessmen involved in producing rods artificially hike the prices, despite having enough stock," he added.

Topon Sengupta, deputy managing director of BSRM, said “The demand for rods has declined during the lockdown enforced by the government to contain the spread of Covid-19. But now the situation has changed.”

(Source: UNB)