Construction material costs shoot up

Even just two years ago, it was possible to buy one tonne of premium brand steel rods for Tk 64,000. Now one tonne of the steel rods costs between Tk 85,000 to 88,000. And over the past two weeks, the price of rods per tonne increased by Tk 8000. In all, the rods prices saw a 37 per cent increase over the past two years.

Alongside rods, the price of bricks, stones, sand, aluminium, PVC pipes and fittings and other construction material has gone up. This has pushed up the price of construction. And the Russian invasion of Ukraine has now pushed up the price of scrap iron and plastic raw materials. Businesspersons fear the prices of rods, PVC pipes and fittings, and such materials will spiral even further.

A survey run by the Real Estate and Housing Agents of Bangladesh (REHAB) indicates that due to the increase in the prices of rods, bricks, sanitary ware and other construction materials, the cost of construction per square foot has gone up by around Tk 355 or Tk 400. As they divide up the flats with land owners, the expenses of the housing companies has gone up by around Tk 710 to Tk 800. They have begun adjusting the additional costs.

Prior to the Russia-Ukraine war, scrap iron cost Tk 570 per tonne. On Thursday this increased in the global market to Tk 700 per tonne. Over the past 13 days, the price of rods per tonne went up by Tk 8000 in the local market, pushing the price up to Tk 85,000 to Tk 88,000 per tonne.

Deputy managing director of BSRM Group, Tapan Sengupta, told Prothom Alo rod production depends on the import of the raw material, scrap iron. As supply is lower than demand in the global market, the price of scrap has been spiralling for quite some time now. As a result, the prices of rods have to be adjusted. He said that after the onset of the Russia-Ukraine conflict, the price of scrap iron in the global market has shot up abnormally.

"On Wednesday we booked good quality raw material at the rate of 715 dollars. The prices in the global market now mean rods will cost Tk 95,000 per tonne," he said.

Meanwhile, though the price of cement hasn't increased afresh, the concerned companies are now discussing the issue. They say that shipment costs of cement raw material has gone up and so has the price of energy fuel in the country. This has pushed the production costs of cement up. Unless this is adjusted, the companies will have to count losses.

President of Bangladesh Cement Manufacturers Association (BCMA), Md Alamgir Kabir, said that due to the increase in freight costs and stiff competition within the country, the cement factories have been running at a loss. If this continues for long, it will not be possible to survive in the sector. There is no alternative but to adjust prices.

PVC and UPVC pipes and fittings, doors, ceilings and such materials are being used increasingly in construction. The price of these products too have gone up by 30 to 35 per cent over the last three or four months. This has put costs of sanitary work up by Tk 20 per square foot, according to REHAB.

Managing director of National Polymer Group, Riad Mahmud, said, "The price of raw materials for PVC and UPVC pipes, fittings started to increase from the end of last year. That was because of increased shipment costs then, but now it is because of the war. Last year the raw materials were 1000 dollars per tonne, but now this is 1900 dollars per tonnes. So we are forced to raise our prices in phases too."

According to REHAB, each brick costs between Tk 10 to Tk 12. Within a year, the price has increased by Tk 2 per brick. Brick kiln owners say depending on the quality, bricks are also available at Tk 8 to Tk 9.

Member of the brick kiln owners association, Md Abdul Islam, said on Thursday night, "Huge amounts of coal is required to burn bricks. Last year coal cost Tk 7,000 per tonne. This is now Tk 24,000 to Tk 25,000. We have been forced to increase the price of bricks due to the price of coal."

REHAB vice president Sohel Rana, speaking to Prothom Alo, said, "The housing sector had just been emerging from the impact of corona. But the spiralling costs of construction material is a matter of concern. The companies are having a hard time constructing flats at the costs these were sold for even just a year ago. If things continue in this way, the housing sector will once again face big losses."