Govt to fix rod, coal prices as local markets see hikes

The government is mulling fixing the prices of mild-steel (MS) rods and coal in line with the international market as the local market has been witnessing a rapid surge in the prices of the two import-dependent items.

To this end, Commerce Minister Tipu Munshi in a meeting with stakeholders yesterday asked the Bangladesh Trade and Tariff Commission to make an analysis on the markets of the items and suggest their rational prices within the next week, meeting participants told The Business Standard.

According to Trading Corporation of Bangladesh data, the lowest price of a tonne of 60-grade MS rods was Tk90,000 in retail markets of the capital on Thursday, which hovered near Tk85,500 in the previous week and Tk83,000 a month ago. The coal market also witnessed a similar trend in price hikes.

In a keynote presentation at the meeting, the Bangladesh Trade and Tariff Commission showed that the hikes are irrational in terms of global price trends. The Business Standard obtained a copy of the presentation.

The price of rod-making scraps in the international market has been in a steady fall since July last year, Mahmudul Hasan, deputy chief of the commission, said while presenting the keynote and added that the price fell by over 22% to $459 per tonne in January this year from nearly $591 per tonne last July.

"Although booking prices increased a bit in January, local importers continued to open letters of credit against scrap imports at lower prices until last December," he added. Consumers, however, did not get the benefits of the price fall.

Some 65% of rod-production costs go to scraps alone. The commission believes that rod prices should be at an affordable level as it is an essential item, with 60% use in public sector construction, 25% in housing and 15% in commercial infrastructure development.

The annual demand for the steel item is around 7.2 million tonnes, which is supplied from 400 mills in the country. Several leading players hold 50% shares of the market, the commission said.

Steel mill owners, at the event, however blamed gas price hikes and the ongoing unstable dollar market for the increase in rod prices. In response, the commission said the hikes in rod prices are higher than that in gas prices.

Regarding coal prices, the Trade and Tariff Commission said importers opened LCs at $115-119 per tonne of coal from November to January last, which was significantly lower than in previous times. Yet coal prices increased.

Hence, the commission proposed setting the coal price and review it every three months. It also suggested the government consider coal as an alternative fuel.

Coal price has been on a sharp increase with some fluctuations after the government made the use of coal as fuel in the brick kilns mandatory to save the environment. Currently, brick kilns are the largest users of coals. The annual demand for the item is 75 lakh tonnes.

During the meeting, Commerce Minister Tipu Munshi urged businesspeople to keep essential item prices at affordable levels. He also warned of tougher action in case of artificial price hikes.

Senior Commerce Secretary Tapan Kanti Ghosh, Steel Mills Association Vice-President Suman Chowdhury, GPH Ishpat Director Kamrul Islam, Bangladesh Bricks Manufacturer Owners Association President Khalilur Rahman, REHAB Vice-President Sohel Rana, among others, were present on the occasion.