Increased prices of some key construction materials, including mild steel (MS) rod, cement, stone and brick, are causing trouble for the country’s construction and real-estate sectors, industry people said.
A number of construction companies have already halted their operations. Many others are struggling to cope with the price volatility, which seriously affected their activities, they added.
However, building material manufacturers said the price spiral mainly resulted from hike in prices of raw materials in the international market, following the Russia-Ukraine war along with other local and international factors.
Besides, increased import cost due to the dollar crisis in the country has added fuel to the fire.
Cost of per tonne rod marked a rise of around eight per cent on an average during the last six months, while cement price has also been maintaining a higher trend through ups and downs.
According to the retail sources, best quality or 72-grade MS rod was selling between Tk 93,000 and Tk 1,02,000 per tonne depending on manufacturers.
Of these, per tonne rod manufactured by BSRM and AKS was selling at Tk 1,02,000 and Tk 1,01,000 per tonne respectively in the capital on Sunday, while the prices of other renowned brands were creeping near Tk 0.1 million per tonne.
As per the Trading Corporation of Bangladesh (TCB) data, cost of per tonne better quality rod increased by 11.30 per cent in this May compared to May 2022.
The statistics also revealed that the price of lower quality or 40-grade rod price increased by almost 4.0 per cent per tonne over the same period.
Sheikh Masadul Alam (Masud), Managing Director of Shahriar Steel Mills Ltd, told the FE that the steel manufacturers are adopting different coping mechanisms, as both demand and supply of the item have declined.
Referring to the dry season when construction work gains momentum, he said: “We haven’t witnessed the usual demand during this peak season.”
The price of per tonne scrap metal, the key ingredient of steel products, has slightly reduced to US$ 460-500 in the international market in recent times, said Mr Masud, also former chairman of the Bangladesh Steel Manufacturers Association (BSMA).
“But we can’t reap any benefit of the price drop, as we have to bear additional expenses for the raw material import, which is a major concern for us now,” he added.
Among other construction materials, per 50-kg portland cement bag was selling at Tk 500-560, depending on brands. The price was between Tk 480 and Tk 530 a year ago.
The cement price fluctuated, but remained at a higher level, said a trader in the city’s Panthapath area.
A truck-load of three thousand bricks was now selling at around Tk 45,000.
Contacted, Rezwanul Kabir, director of the Bangladesh Association of Construction Industry (BACI), said prices of almost all construction materials are increasing day by day, causing serious trouble for them.
The BACI has around 200 registered members, whereas a huge number of other (non-member) construction companies are operating in the country, according to the sources.
“A number of the construction companies have stopped working on the undertaken projects, as they are likely to incur loss due to uncertainty involving with the price hike,” said Mr Kabir, who is also the Managing Director of Energypac Infrastructure and Development Limited.
Many companies stopped looking for new projects, while some are waiting for price adjustment.
The sloth in infrastructure development means a negative impact on the economy, as the construction sector makes a good contribution to the country’s gross domestic product (GDP), he noted.
The sector’s share in the economy was nearly nine per cent, and it generated direct employment for six million people three years ago. The sector might have been affected to some extent by this time.
Another problem is the possibility of quality fall, as some contractors might use substandard materials to ensure their profit after offering lower bids to grab work orders, Mr Kabir observed.
“Unlike the international contractors, working in the country’s major infrastructure projects, the local contractors are the sufferers due to the price volatility and absence of a suitable policy to adjust prices for them in line with the changes,” he added.