The price of steel rods, a key construction material, has dropped to a four-year low due to a sharp decline in demand, according to manufacturers and traders.
Currently, 75-grade mild steel (MS) rods are priced at Tk80,000-82,000 per tonne, down from Tk95,000 in July. This marks a drop of up to Tk15,000 per tonne in just four months. Before the Covid-19 pandemic, the price was around Tk60,000 per tonne, and it steadily increased since 2021, reaching over Tk1 lakh in 2022-23.
The heads of rod manufacturing companies say the production cost of 75-grade rods is Tk95,000 per tonne. As a result, they are losing Tk15,000 per tonne at the current selling prices.
KSRM, a leading rod manufacturer, usually produces and sells 2,500-3,000 tonnes of rods daily during the construction season (November-March). However, its sales have now dropped to under 1,000 tonnes per day.
KSRM Director Mohammad Jasim Uddin said, “To prepare for the construction season, we maintain normal rod production even during the off-peak monsoon season. However, since the government transition in August, construction work on government projects has almost stopped.
“As a result, the demand for rods has dropped by over 60%. With our goods in stock, we are forced to sell them at a loss.”
He added, “We cannot store the produced rods for long because they may develop marks, lowering their value. At the same time, storing unsold products increases costs due to rising bank interest. So, despite the losses, we have to sell them in the market.”
Sarwar Alam, director of HM Steel and Golden Ispat, said, “Around 70% of the country’s total steel demand comes from government construction projects, while the remaining 30% comes from individual consumers.
“However, due to stagnation in both government and private construction, rod prices have fallen to their lowest in five years.”
He explained that, despite knowing they are incurring losses, they must maintain minimum production levels. This is because fixed costs, such as employee salaries, remain even if production stops.
Sarwar Alam added that each factory is currently facing monthly losses of Tk20-50 crore, at a rate of Tk15,000 per tonne.
During the construction season, M/s Zaman Enterprise in Asadganj, Chattogram, supplies 300-350 tonnes of rods daily to various regions, purchasing from different mills. However, its daily sales have now fallen below 50 tonnes, according to the owner, SM Kamruzzaman.
Manufacturers and traders report that 75-grade rods are currently selling at Tk80,000-82,000 per tonne, while 60-grade rods are priced at Tk73,000-75,000 per tonne at the factory level. Before July, 75-grade rods were priced at Tk94,000-95,000 per tonne and 60-grade rods at Tk86,000-88,000 per tonne.
Sumon Chowdhury, secretary general of the Bangladesh Steel Manufacturers Association, said that 90% of the raw materials and machinery for the steel industry are imported.
Over the past two and a half years, the exchange rate of the US dollar has risen to Tk120-125, reducing the steel industry’s working capital by 40%. As a result, companies are struggling to repay bank loans and are at risk of default. Some companies have already shut down due to ongoing losses, he added.
Since the change of government on 5 August, following the student-led uprising, major development projects have slowed significantly. Additionally, communication disruptions caused by floods in various districts have delayed private and individual construction. This has led to a drop in demand and sales, causing a sharp decline in rod sales.
Sekander Hossain, chairman of KR Group, said, “We stopped production at our factory in August because production costs no longer match the market price of rods.” He added that KR Steel has the capacity to produce 250 to 270 tonnes of rods daily.
According to the Bangladesh Steel Manufacturers Association, there are about 200 steel factories in the country, including 40 large ones. These factories can produce around 1.1 crore tonnes of rods annually, while domestic demand is 75 lakh tonnes.
So far, the sector has attracted an investment of Tk75,000 crore, with an annual transaction volume of Tk70,000 crore.
