Steep price rises of ms (mild steel) rod along with other building materials pushed construction and real-estate sector into slowdown, with its cascading impact on interlinked sectors of the economy, sources say.
According to them, such volatility will impact Bangladesh's overall economy in the long term as many other sectors are linked with the construction activities in the country.
Millers say the price spiral is taking place mainly due to the increase in the price of scrap metal that is used here as the main ingredient of steel products. The shipping cost has also increased several times compared to the pre-pandemic level.
Uncertainties stemming from the Russia-Ukraine war are dealing the latest blow to the construction activities that had already been struggling with the pandemic fallout across the globe, they add.
Several retail sources in the capital city said 72-grade ones- or the best-quality steel products available in the country-were selling between Tk 90,000 and Tk 95,000 per tonne in recent days.
"Even in December last, the prices ranged between Tk 75,000 and Tk 80,000 depending on manufacturers," says Tanim Rahman, a retailer in the city's North South Road.
According to data available with the Trading Corporation of Bangladesh (TCB), as of March 25, best-quality or 60-grade mild steel rod was selling between Tk 83,500 and Tk 91,500 per tonne.
The TCB data also reveal that the latest price was around 26 per cent higher than in the corresponding period of last year and 12 per cent higher compared with that of a month ago.
Besides, 40-grade rod was selling between Tk 77,000 and Tk 80,000 per tonne, which was nearly 20 per cent higher than the same period a year ago.
Talking to the FE, deputy managing director of leading manufacturers BSRM Tapan Sengupta said the price of scrap metals were on an upward trajectory amid pandemic, and kept rising fast amid the outbreak of Russia-Ukraine war.
"The Russia-Ukraine war has added fuel to the flames in the global steel sector that was severely suffering from demand-supply mismatch," he says.
The two countries supply 50 million tonnes of scrap metal and a significant amount of other raw materials used by the steel sector, says Mr Sengupta.
According to sources, per-tonne scrap metal on the global market was selling at around $680 to $700 per tonne, depending on various aspects, which was $550 to $600 per tonne in December.
Contacted, a director of Bangladesh Association of Construction Industry (BACI) Rezwanul Kabeer said the increase in prices of construction materials has seriously affected the sector due to the unpredictable changes with pricings.
"We are in trouble as actual prices of the construction materials, especially ms rod, are much higher than they were estimated for the government projects two or three years ago," he says.
He says virtually the construction companies have to count losses if they continue with the projects with the existing prices.
In a press conference last week, the BACI leaders said in the last one year per-bag cement price increased by 22 per cent, per-cubic-foot stone by 24 per cent, per-thousand brick by 22 per cent and electric-cable coil by 94 per cent.
Vice-president of Real Estate & Housing Association of Bangladesh (REHAB) Kamal Mahmud said construction cost of per-square-foot flat increased by Tk 700 on average due to the price hike of rod along with other materials.
There has been increase of 15 per cent on average in prices of all the building materials, he said, giving an overview of the crisis situation.
"A realtor will have to sell an apartment at Tk 7,000 per square foot that was committed for Tk 5,000," he says, adding that, in the process, middle-income families will find it difficult to afford their own flats.
The government should establish a monitoring cell to check any unusual price rise, he suggests.
