Rod production decreases significantly due to crisis of raw materials from old ships

Staff Reporter :
Country’s re-rolling mills are facing an acute crisis of raw materials, resulting in a significant decrease in rod production.
The rod market is now at risk of becoming nonviable due to this sudden shortage, and the prices are already starting to show a rising trend.
This crisis has affected the overall economy of the country, as rod production is a crucial component of many industries, including construction, transportation, and manufacturing.
According to industry insiders, the primary cause of this crisis is the shortage of crucial raw material used in rod production. Due to the current global situation, the import of scrap ships in the country has decreased, causing concern about a decline in the industry.
The work in private construction industries has come to nearby a halt, caused by a slump in the scrap ship industry that spans from Faujdarhat to Sitakunda of Chattogram.
The scrap ship industry is the main source of adding scrap metal, which is the main raw material for producing rods in the country.
Different grades of rods are produced in the re-rolling mills of the country using scrap metal from the broken parts of old ships. According to sources, currently there is no large scrap ship being imported into the country.
However, few small scrapped ships that are being imported are insignificant compared to the demand. As a result, the price of iron has skyrocketed.
And the construction industry is also being affected by its influential impact. If the current situation persists, there is a fear that ship breaking activities in the country will come to a standstill.
Currently, the price of rods has come to Tk 95,000 per tonne. If the situation persists, there is a possibility that the price of rods may increase further, the stakeholders of the Bangladesh Ship Breaking and Recycling Association (BSBRA) said.
Sources said when Bangladesh Bank imposed more restrictions on the import of old ships to save foreign reserves, it badly affected the industry.
As a result, although there were 60 ship-breaking yards in operation previously, currently only 10 have taken up the task. One after another, ship-breaking yards are being closed down.
Around 60,000 workers and employees are directly involved in this industry, and almost 1.5 lakh people are indirectly involved in this sector. Currently, the workers’ activities have come to a complete halt.
The price of imported scrap ships has also increased. Previously, the price per tonne of a ship was 500 US dollars, but now it has increased to around US $600.
In addition, there are also fewer ships available for import. Most of what is being obtained is being imported from neighboring India as scrap.
Around 60 to 70 per cent of the raw materials for scrap rods come from the ship-breaking industry, but now the supply has badly been suffered.
Currently, the import quantity of scrap ships has been decreasing in the country since 2022. It has reached an extreme low level at present.
Kamal Uddin Ahmed, Senior Vice-President of BSRM, said, “Those involved in the scrap ship business opened LCs for deferred payment instead of UPAS LCs to save dollars and low interest rates.”
“At that time, the price of the dollar was between Tk 80 and Tk 90. After paying off the LC, the price of the dollar has increased extensively. As a result, the cost per dollar has multiplied for the people,” he explained.
“As a result, many have been forced to shut down their yards. Again, many have suffered massive losses due to bank loans.
Currently, the Bangladesh Bank has directed to open LC within a range of three million dollars for the import of old ships. However, in this regard, commercial banks are unable to supply dollars. As a result, some importers are currently importing ships up to a maximum of 2,000 tonnes. This is failing to meet the demand for scrap material compared to larger ships”.