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Construction businesses decry high rod prices

Contractors awarded jobs earlier count 15pc loss

STAR BUSINESS REPORT
Leading construction companies yesterday urged re-rolling millers to go for cost-cutting measures, saying that due to high cost of MS (melted scrap) rod, the construction work has slowed down.
They said contractors who had received contracts in public sector work are counting a loss of at least 15 percent with the increase of price in rods.
Informing a commerce ministry meeting, leaders of Bangladesh Association of Construction Industries (BACI) said in the present situation re-rolling mills should reduce MS rod price by at least Tk 2000 per ton for the survival of those involved in the construction business.
MS rod (40-grade) was selling at Tk17,000 per ton until February 2003 which went up to Tk 36,000 in 2004 and with reducing taxes it is now being sold at Tk 33,000, posting an increase trend of more than
90 percent, they said.
On the other hand, re-rolling mill owners said prices of raw materials (scrap) have gone up by around US$ 200 per ton in the global market and the prices have a chain effect on the local industries.
"Until now 80 percent re-rolling mills have closed down with the slow pace of work in the public sector and poor demand from the private sector," said Yasin Ali, vicepresident of Bangladesh Ship Breakers Association (BSBA), at the meeting.
Commerce Minister Altaf Hossain Chowdhury chaired the meeting while Chairman of the National Board of Revenue Khairuzzaman Chowdhury, Commerce Secretary Md Aminur Rahman, officials from Bangladesh Standard and Testing Institution and leaders of BSBA were present at the meeting.
Speaking at the meeting, Altaf said high price of scrap ship is not a problem for Bangladesh only as big
economies like China, US who earlier used to export scrap have emerged as importing countries, aggravating the situation.
The government has already reduced import duty on scrap to 7.5 percent from 15 percent and MS rod to 15 percent from 30 percent, he said adding there is no shortage of MS rod and the raw materials.
Prices of MS rod in the country are now Tk 4000 to Tk 5,000 less than those of India and Pakistan, Altaf said.
"Now the rod manufacturers and construction companies should sit together to cope with the present sluggish trend in the construction industries," he added.
According to the BSBA, imports of scrap ship have reduced substantially due to price hike. Around 12.52 lakh tonnes scrap ship was imported in the 2003-04 financial year against 17.61 lakh tonnes in the 2001-02 fiscal year.