Page 33 - IBT Full Pdf

DREAMS
Construction Industry ON HALT

Bangladesh Steel Manufacturers Association THE GLOBAL PERSPECTIVE
(BSMA) and Managing Director of Metrocem Such scenarios are not just being observed in Bangladesh; but
Ispat, said that steel prices are rising in the in all parts of the globe. Despite recent price reductions in raw
local market as a of the global price hike of materials such as lumber and steel, mainly in the United
scraps. States, European construction material firms continue to face
Insiders in the real estate industry estimate greater expenses. As a result, many European manufacturers
that the increase in mild steel (MS) prices will expect their output prices to rise even further. According to a
raise the cost of building apartments and European Commission poll conducted in July, 40% of concrete,
homes by 10% to 15%. It will also have an cement, and brick suppliers anticipated to increase their costs
impact on the construction prices of several big even more. The percentage of enterprises expecting to boost
and small projects, such as bridges, culverts, the price of lumber and metal is considerably greater.
and flyovers, they added. A 60-grade MS steel Nonetheless, it appears that the peak for these products has
rod was selling for Tk 73,000-75,000 per ton at passed, but labor constraints and the uncertainty of the
several markets in the capital, while a 40-grade pandemic could prolong price stabilization or downward
MS steel rod was selling for Tk 58,000-60,000 adjustments.
per ton. Dealers and sellers are concerned that
prices would continue to rise, with the per ton
price of 60-grade MS steel reaching Tk 80,000. GLOBALLY,
Steel prices in the country have risen by 38% in CONTRACTORS ARE
the previous year, according to market insiders, EXPERIENCING A
who are concerned that the manufacturing
costs of public infrastructure projects and DECREASE IN THEIR
private residential buildings would drive prices OVERALL MARGINS
even higher. Due to limited availability
resulting from a drop in production in Japan The cost of construction materials
and Europe during the pandemic, steel has increased, putting pressure on
entrepreneurs say the price of scrap metals has profit margins. Because profit
risen dramatically in the worldwide market. margins in the construction industry
However, as most economies returned to are typically between 2 and 4%, this
normal following widespread vaccination can quickly lead to loss-making
efforts, demand for scrap and steel increased. projects. Generally speaking, there is
The price of bricks has also drastically a positive correlation between input INVENTORIES MUST BE improvement in inventory for these construction supplies. In
increased within this time period. The price of costs for building materials and IMPROVED fact, the opposite is true. In July, a record number of building
one piece of locally produced brick has gone up output prices of construction material suppliers complained that the value of their finished
by Tk 1.5, auto bricks by Tk 2.5, ceramic bricks projects. Contractor output prices Suppliers must perceive an improvement in product inventory was (too) low. As a result, before the costs
by Tk 5, and concrete bricks by Tk 8. The climbed faster than input prices their inventory before they consider cutting of these building materials stabilize, let alone decline, we
president of the Real Estate and Housing from 2018 to the end of 2020, which sales prices because a growth in their stock need to see some stock improvement. Taking into account the
Association of Bangladesh (REHAB), Alamgir might have resulted in bigger profits. However, due to rising raises competition and puts lower pressure six to nine-month price delay, we are not expecting concrete
Shamsul Alamin, stated that prices of construction material costs, input prices are swiftly catching up, on pricing. For example, during the outset of and cement prices to fall before the summer of 2022.
practically all sorts of construction materials with the largest increase in the first quarter of 2021, since the financial crisis, building material
had increased by 20% to 30% in the last six 2004, putting pressure on margins. suppliers began to detect an increase in THE PRICE OF TIMBER WILL
months. Evidently, the adverse effects of such their inventories in April 2007, but it wasn't DECREASE SOONER RATHER THAN
price hikes are now being borne by the TIMBER AND STEEL PRICES ARE until August 2008 that a growing number of
Steel prices in Bangladesh are continuing to rise customers. Mr. Ratul, who was about to finally enterprises indicated that they expected to LATER
as the price of imported raw materials rises in MORE SENSITIVE THAN CONCRETE, lower their prices. Timber and steel prices have a shorter response times. When
Although many have saved years of their income to buy the global market. The growing cost of steel, buy a flat in Mohammadpur in February last CEMENT, AND BRICK PRICES building suppliers of these materials observe an improvement
a piece of land in the city, the global pandemic has according to real estate entrepreneurs, is having year, had to face such an unwanted CONCRETE AND CEMENT in their inventory, they almost immediately predict fewer price
brought many such dreams to a screeching halt. Due to a direct influence on their industry, driving up consequence. As soon as the global pandemic There is a global market for steel and lumber, with a large hikes. The improvement of stocks and price fluctuations are
global supply chain disruptions, the prices of building building expenses. Imported melted scrap, which hit, the development company handed him a number of buyers and sellers. This makes these marketplaces COSTS WILL REMAIN separated by only one or two months. Furthermore, value
raw materials have risen dramatically in the past couple is the primary raw material for steel, is currently notice mentioning that he needs to pay an more competitive and transparent, resulting in a more direct HIGH UNTIL AT LEAST chains must first be established. After severely limiting it
of years. Buyers are now being forced to purchase at worth around $550-$590 per ton, up from additional Tk. 2 lakh for the increased prices of pass-through of raw material price fluctuations in the value during the COVID-19 crisis, this could still take some time. For
higher prices to cover the increased costs. Prices of $490-$500 per ton just a few months earlier and the raw materials. As per Rehab data, the chain. Concrete, cement, and brick markets, on the other hand, MID-2022 example, transportation remains a major issue. We predict
everything – starting from cement, rods to even floor tiles $300-$350 per ton in October of last year. number of under-construction flats in Dhaka are huge and heavy, making transportation difficult and According to correlation studies, sales prices lumber and steel shortages to persist until at least early 2022
have continued to rise since last November. Let us take a Furthermore, the price of iron retrieved from ship and Chittagong is over 50,000 and all the expensive. As a result, these markets become less competitive. of building materials such as concrete, as a result of value chain disruptions. As a result, elevated
detailed look into how these price hikes are affecting the breaking has risen, further increasing the price of owners now have to pay extra money for their As a result, procurement price changes are passed on more bricks, and cement react to changes in the costs for lumber and steel for construction projects are
real estate industry of Bangladesh. steel, according to industry sources. Md homes. The prices of these flats, depending on slowly. This could also explain why steel and timber costs appraisal of their stocks six to nine months expected to persist for the next few quarters before leveling
Shahidullah, General Secretary of the size and materials used, have increased by have risen faster than others. later. However, we are currently seeing no
10%-12%. off.

32