Rod market crashes as demand drops by 50% following government change

The steel industry, one of the country‍‍`s biggest sectors, is facing a serious downturn. 

With over 200 factories in operation and investments worth Tk 75,000 crore, the industry used to see around Tk 70,000 crore in annual transactions. 

However, the situation has changed drastically, as demand for rods has suddenly fallen, and half of the buyers seem to have vanished.

To survive, rod producers have been forced to lower their prices, but even that hasn’t brought buyers back.

Prices for rods have now dropped to their lowest in four years, leaving factory owners in significant financial trouble. Despite the price cuts, the market remains sluggish, causing major concern for the steel industry.

The situation took a turn on August 5, when Sheikh Hasina was removed from power and fled to India, followed by the formation of an interim government. 

Since this political change, major development projects have slowed down or completely stopped. 

Many contractors have disappeared, and with local government officials removed, development work in city corporations, upazilas, and unions has ground to a halt.

This slowdown has also hit the real estate sector hard. Due to the current political situation and the impact of the Detailed Area Plan (DAP), the market for flats and plots is almost non-existent. 

Fewer flat sales have directly affected the demand for steel, as fewer construction projects move forward.

As a result, MS rods (75-grade) are now being sold at Tk 80,000 to Tk 82,000 per ton, compared to Tk 95,000 just a few months ago in July. 

In just four months, prices have dropped by Tk 15,000 per ton.

The last time rod prices were this low was back in 2020. Since 2021, prices had gradually risen, eventually crossing Tk 100,000 per ton by 2022.

The sharp decrease in buyers has hit business owners hard, particularly producers, many of whom are worried about whether they can continue running their factories.

According to rod producers, it currently costs about Tk 95,000 to produce one ton of 75-grade rod, yet they are forced to sell it for Tk 80,000 to Tk 82,000, resulting in a loss of around Tk 15,000 per ton.

An official from KSRM, one of the country’s leading rod manufacturers, shared that during the construction season, from November to March, they typically sell 2,500 to 3,000 tons of rods daily. However, sales have now plummeted to below 1,000 tons a day.