Coronavirus outbreak: Prices of raw materials go up

A medium category drill machine would cost Tk 36,000 at the Nawabpur wholesale market just 15 days ago, but the price has increased by TK 6,000 in two weeks following the coronavirus outbreak in China.

Owner of Jamuna Traders, stationed along Nawabpur road, Shahidul Islam said the prices of machineries imported from China have gone up as imports from the coronavirus-hit country almost remain suspended.

No one knows when the market will be stable, he added.

Following the coronavirus outbreak in China’s Hubei province, the prices of Chinese kitchen items like onion, garlic and ginger increased. Now the prices of industrial raw materials, machinery and other items imported from China have gone up.

Wholesalers in Old Dhaka feared running out of products soon.

China is the key source of Bangladesh’s raw materials and other industrial items. In 2018-19 fiscal, Bangladesh imported products worth nearly Tk 56.06 billion. Around 25 per cent of the products are procured from China alone.

Statistics show the exports to china are much lower than any other country. In the last fiscal year, Bangladesh earned only 2 per cent of its total export earnings from China.

While visiting the market, Prothom Alo correspondent found that the prices of industrial items have gone up in the wholesale markets of Old Dhaka.

The Nawabpur Road area is one of the key business hubs of Bangladesh. A large amount of spare parts is supplied from this place.

The businessmen there told Prothom Alo that lion's share of the machineries are imported from China while some are procured from Japan, Korea and Europe. The products imported from China have been costlier.

Imports from China suspended

Prices of industrial raw materials to spare machineries are going up.

A week back, a customer, for example, has to spend Tk 120 to buy a piece of union fitting made of stainless steel. The price of the item rose to Tk 140 yesterday, meaning that the prices have creased by 16 per cent within a few days.

A medium size-aluminum sheet with 0.5 millimetre thickness earlier cost Tk 153 that jumped to Tk 162.
Delowar Hossain, one of the importers in Nawabpur Road area, said the factory in China has been shut. The Chinese government on Monday would announce when the factories will reopen.

“We have opened a letter of credit in which the Chinese said they will provide materials in 40 days into reopening of their factories,” he added.
There are a lot of importers in Nawabpur area. They imported a lot of materials in advance. That is why the impact due to shutting down of the Chinese factories has not yet been visible.

It will be realised next month, he added.

Asif Rabby, a buyer from Munshiganj, said he is an owner of a shop named Madina Traders in Munshiganj. He sells spare parts.

"The price of each and every item is very high. Now, I've got to spend more.”

From Gulistan to enter Nawabpur Road, on both sides, there are shops for electrical items.

Some of the traders said around 70 per cent electrical products are imported from China. As imports have been affected, the prices of the items have slightly increased.

Chemical is one of the key raw materials of an industry.

Prices of the chemical substances are also on the rise. A tonne of calcium carbonate was Tk 13,000-14,000. The price of the same amount of calcium carbonate exceeds Tk 15,000.

Asked about the matter, PVC pipe manufacturers’ association president Abul Khayer said prices of many chemicals like wax and acid imported from China have increased.

It will affect the production cost, he added.

Some of the traders involved in leather manufacturing complained about the high price of chemicals.

Bangladesh Tanners Association’s general secretary Sakhawat Ullah told Prothom Alo that 30 per cent of the chemical used in leather processing is imported from China.

The prices of chemicals imported from China have increased.

The coronavirus outbreak has also affected the restaurant business. A shop owner in Karwan Bazar said prices of processed mushrooms, baby corn, oyster sauce, foil paper and wrapping paper imported from China are on the rise.

If the prices of the Chinese products increase, the small and medium industries and service sectors will be affected as these industries depend on imported raw materials.

Asked about the matter, Centre for Policy Dialogue (CPD) research director Khondaker Golam Moazzem said, “We must assess whether it is a crisis for short-term or midterm. If it’s a midterm crisis, we must seek an alternative source.”

“We should also look into the measures what China-dependent nations like India and Vietnam are taking up to fight back the crunch”

*This report, originally published in Prothom Alo print edition, has been rewritten in English by Toriqul Islam.