The Financial Express

Prices of building materials register significant rise

Hike triggers anxiety among realtors

| Updated: October 25, 2017 05:37:01

Prices of building materials register significant rise

The prices of key construction materials, including steel rods and bricks, have marked a significant rise in the recent times, triggering anxiety among the realtors, sector insiders have said.

They said the price of rods has constantly been increasing for last several months mainly due to high cost of raw materials.

Congestion of cargoes at Chittagong seaport, increased transport cost and disruptions in gas supply to some steel mills were also responsible for the price hike, they added.

Talking to the FE, traders at the old Dhaka said the price of rods increased by a range between Tk 4,000 and Tk 5,000 per tonne in last three to four months.

Sonjoy Chowdhury, proprietor of Metro Traders at Nawab Yousuf Road, said the cost of raw materials is on the rise for last couple of months despite sluggishness in demand. "The millers have constantly been raising the price since May. That's why we have to sell at higher price," he added.

The trader said the 500W grade rods were being sold at a range between Tk 57,500 and Tk 58,000 per tonne last week, which ranged between Tk 52,000 and Tk 53,000 in early June.

Another trader Tanim Rahman, proprietor of Dewan Traders at English Road, said the price started rising before placing the national budget for the fiscal year (FY) 2017-18, when the new Value Added Tax (VAT) law was supposed to be implemented.

However, the new VAT law has not been implemented.

"Since then, the price of rods is on the rise. It went up too high from the last week of August," said Tanim.

The 300W grade rods were selling at Tk 47,000 per tonne.

While contacted, executive director of Bangladesh Steel Re-Rolling Mills Limited (BSRM) Tapan Sengupta said a surge in the prices of raw materials in the global market was the key reason for the rod price hike in the local market.

The price of billet in the international market rose to US$550 per tonne from $420 three months ago, he said. Besides, the price of scraps also went up to $370 per tonne from $240.

"In addition, the manufacturers have to pay $20 per tonne of raw materials at the Chittagong port as demurrage and other charges," he said.

He added that the transportation cost also increased in the recent months since the declaration by the concerned authorities to limit the weight per trailer.

Bangladesh Auto Re-Rolling and Steel Mills Association President Manwar Hossain said the traders were reluctant to import scraps via the Chittagong port due to intense congestion of cargoes in the recent times.

"Cargo vessels are incurring huge demurrage at the port," said Mr Hossain.

Leading raw materials suppliers were reluctant to sell scraps to Bangladeshi companies due to such complexities, he added. "We are now buying scrap from the second-grade suppliers to continue manufacturing."

"We have to pay an extra $50-$60 per tonne for import of scraps as compared to India due to such complexities in the recent months," he said. Besides, the still mills in Tongi region were not getting gas supply.

"No mills in the region are getting gas supply for more than six to seven hours," he added.

Sources said the overall production at the mills have been reduced by almost 50 per cent following shortage of the raw materials.

Meanwhile, the price of bricks and sand also rose in the recent weeks due to rise in transport cost and other disruptions following the flood, sources said. The cement price, however, remains stable.

They also said the kiln owners were charging higher at the production level.

Construction materials suppliers at Gabtoli's Balughat Road said the price of per thousand pieces of bricks rose by Tk 500 to Tk 1,000 than that of two months ago.

Anwar Mia, manager of a bricks and sand supply business, said they were selling per piece of brick at Tk 9.0 only. "We are asking for Tk 27,000 per truck of bricks, which was Tk 24,000 two and half months ago," he said.

He said the price might vary at a range between Tk 1,500 and Tk 3,000 per truck depending on the quality.

Sources said the price excluded the transportation cost, which varies depending on the destinations.

The price usually increases in this season. However, it may come down in near future when the brick-kilns would start manufacturing for the new season.

Cost of standard quality brick pie (broken bricks) rose from Tk 14,000 to Tk 17,000 per truck in line with the brick price. The cost of white sand rose to Tk 7.5 per cubic foot form Tk 6.0 a month ago.

However, the price of red sand reduced slightly after the Eid-ul-Azha. It was selling between at Tk 5,500 to Tk 9,000 per truck.

The price volatility in construction materials has generated anxiety among the realtors.

When contacted, a director of Real Estate and Housing Association of Bangladesh (REHAB) Kamal Mahmud said the price hike of construction materials was jeopardising the sector's growth.

"Our project cost is going high following the rise in cost of the construction materials," he said.

Nowadays, many of the customers prefer ready flat as some companies were failing to handover the flats in time.

Mr Kamal also said it has become very difficult for the comparatively smaller companies to sell the flats after completing them.

The authorities concerned must look into the matter if there is any case of market manipulation for increasing the price of construction materials, and take immediate actions accordingly, he added.

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