In the past month, the average price of rod rose by Tk 2,500 a tonne to between Tk 43,000 and Tk 45,500 depending on the quality of rod, said construction materials sellers in the capital.

The increase has been caused by higher prices for scrap metal, an important component of rod, and by government moves to ensure that steel and re-rolling mill owners pay power bills and government duties properly.

Real estate developers said apartment prices could increase by Tk 200-250 per square feet due to the increased price of rod.

At Testuri Bazar at Farmgate area in Dhaka construction material dealers said 60-grade MS rod now sells at Tk 45,000-Tk 45,500 a ton against Tk 43,000-Tk 43,500 one month ago, while 40-grade MS rod now sells at Tk 41,000 a ton against Tk 38,500 a month ago.

During the same period scrap metal prices on the international market have risen from $ 300 per ton to $350 and much of this increase has yet to be reflected in rod prices in Dhaka.

"Scrap prices in the international market are very volatile and that is why I have decided not to import scrap as long as the market remains unstable", said Mr Morshed, a scrap importer.

"It is the beginning of instability in the sector as scrap prices are still increasing," feared Sk Masadul Alam Masud, general secretary of Bangladesh Re-Rolling Mills Association and Bangladesh Steel Mill Owners Association.

Concerned at the rising price of rod, the Real Estate and Housing Association of Bangladesh (REHAB) held a meeting with steel and re-rolling mill owners to discuss the situation, said Md Abdul Awal, president of REHAB.

Some developers urged the government to build a monitoring cell to watch the price of scrap in the international market and its effect in domestic markets. They also suggested that the government take effective measures so that the construction materials market does not fall prey to price syndicates.

Real estate developers said generally the construction work reaches its peak between March and June due to the easy availability of brick during this time.

This year is different however as potential apartment buyers and builders appear scared to invest large sums of money due to the prevailing political situation, said SM Anwar Hossain, chairman of Advanced Development Technologies Ltd, and vice president of Real Estate and Housing Association of Bangladesh (REHAB).