A hike in scrap metal prices in local markets has pushed the prices of mild steel (MS) rod by 20 percent in a span of two months.
The price of 40-grade MS rod is now selling at Tk 47,000-49,000 a tonne against Tk 37,000-38,000 two months ago, while the 60-grade category has soared to Tk 52,000 from Tk 43,000-44,000.
"Shipbreakers now charge Tk 35,000 a tonne of scrap, but the rate was Tk 26,000 two months back," said Mizanur Rahman, managing director of Rahim Steel Re-Rolling Mills.
The price of rod, an important construction material, is a concern for the people close to the urbanisation of the country, which has been experiencing economic growth of over 6 percent for the last four consecutive years.
The present stock of scrap in Chittagong is around nine lakh tonnes, according to a shipbreaker.
Shipbreakers blame the scarcity of oxygen for the surge in the price of scrap.
"Oxygen is an important ingredient for melting down the scrap. But recently we are facing its severe shortage," said Kamal Uddin Ahmed, owner of Sea-Shore International, a leading shipbreaker.
Industry insiders say the ship breaking industry cannot meet over 25 percent of the 25-30 lakh tonnes domestic demand for steel and iron products a year. The 75 percent demand is met by the imports of scrap.
The rod price recorded a peak early last year when the international market price of scrap jumped to nearly $800 a tonne. At that time a tonne of 60-grade rod was charged up to Tk 70,000 and 40-grade Tk 65,000.
Bankers find no reason for the present price rise, as imported scrap now hovers around $300 a tonne.
"Probably, the scrap importers want to make up for the losses they faced last year," said a top official of a private commercial bank.
Such a loss reached even around Tk 100 crore for some of the scrap importers in 2008 because of higher import cost and the sudden price-drop, locally and internationally.
Echoing bankers' views, Aameir Alihussain, director, Bangladesh Steel Re-Rolling Mills Ltd (BSRM), said, "Some importers are trying to average the price. They incurred a huge loss last year for the higher import cost."