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Rod price still up despite fall in scrap ship price

TAWFIQUE ALI
Price of MS rod, a key construction material, in the retail market is still high despite a downtrend in the price of scrap ship in the international market.
Rod price went up unusually in local market in February this year following a sudden price escalation of scrap from $200 to $420 per ton in the international market. But scrap price came down to around $330 last week, sources said.
The government also reduced all the duties and taxes from scrap import imposing a flat rate of 7.5 percent but it hardly had any impact on the retail market of rod, which is manufactured by rerolling mills mainly using ship scrap.
The price of 40-grade MS (mild steel) rod in the local market was Tk 18,500 in January 2003 which shot up to Tk 38,500 by February 2004.
During the same period price of 60-grade rod rose from Tk 23,500 to Tk 42,000.
The 40-grade rod is now selling at Tk 32,000 to 35,000 per ton, 60-grade at Tk 39,000 per ton and ingot rod at Tk 31,000 to 31,500 per ton in the retail market.
Rod manufacturers, wholesalers and retailers attribute the increased rate to high international price of scrap ship, dearth of available meltable scraps, price hike of chemicals and power outage at rerolling and steel mills.
The re-rolling mill owners said they cannot use full production capacity of their units because of frequent power outages, which disrupt melting process at the plants.
"There is a wide gap between demand and production of rod, which contributes to the high market price," said M Badiul Alam,
president of Bangladesh Steel Mill Owners Association.
Alam said he had to procure ship scrap at Tk 28,000 per ton from Chittagong for his Purba Ispat Ltd while the price of 40-grade rod at the mill end is Tk 33,000 per ton.
"In international market, price of ferro chemicals doubled in the recent months which is another factor for high price of finished product," he said.
Alam believes the high price will persist at least for next two years because of construction for Olympic Games village and huge domestic demand for MS rod in China.
Chemicals like ferro silicon and manganese used for rod re-rolling now cost Tk 80,000 to 90,000 per ton, which was Tk 40,000 a year back.
Managing Director of Bikrampur Steel Ltd. Serajul Islam
said another reason for high rod price is the unusual price hike of local meltable scraps. "Its price has gone up to Tk 21,000 to 22,000 per ton which was Tk 10,000 to 12,000 a year ago."
Housing and construction industry people however believe the price of rod should not remain so high following the recent development in the international market.
"Price of per ton 60-grade rod should reasonably be settled at Tk 35,000 and that of per ton 40-grade at Tk 30,000," said president of Real Estate and Housing Association of Bangladesh (Rehab) Toufiq M. Seraj.
“The arguments of rod manufacturers and traders are not fully acceptable," said a high official of commerce ministry. "The price should have come down after the tax waiver.”