Scrap Buyers Find Ship-Breakers Too Demanding

Ship scrapping in Bangladesh under pressure.

 

A fresh row over scrap steel has put Bangladesh’s ship-breaking industry into peril. The ship-breakers have raised the price of scrap steel by Tk 1000 (US $15.79) per metric ton and decided to sell the same through their association only instead of open bidding system.

 

A report published earlier this month said the ship-breakers' decision infuriated the scrap steel buyers to such an extent that they (buyers) have stopped purchasing the scrap from the ship-breaking yards. They have also announced that they would not buy scrap until such restrictions are withdrawn. Country's requirement of raw scrap is around 1,50,000 metric tons per month. Out of it, more than 90 percent is supplied by the ship-breakers.

 

The immediate casualty will be the over-heated construction sector. The real estate developers have already been reeling under unprecedented price-hikes of steel rod, iron and other materials. Recently, they have raised the prices of apartments to remain in the business. Fresh price-hike of steel rod will definitely add to their woes. The ultimate sufferers will be the commoners.

 

The scrap buyers alleged that the businessmen in ship-breaking industry were creating an artificial crisis of scrapped steel and iron in a syndicated manner and increasing its price unilaterally, time and again. This, they said, are causing further rise of various finished steel and iron products in the country.

 

They, however, claimed that the decision was the result of a "syndicated operation" by the owners of scrapped ship-breakers industry to establish monopoly in the steel and iron market. Market sources say a syndicated trade to establish monopoly and the repeated price-hike of scrapped steel by the owners of the ship breaking yards will have an adverse impact on the country's finished steel and iron products as well as construction industry.

 

The ship-breakers, however, said that they had to readjust their price as the prices of scrapped ships shot up in the international market and the decision to sell the scrapped steels through association was to check the foul-play with the price both by its members or middlemen. About the syndicated price-fixing, the ship-breakers said they had formed the syndication for their own sake.

 

Traders said the ship breakers increased the price of scrapped steel four times from January to March this year and four times last year.

 

Bangladesh’s scrapped ship-dismantling industries supply about 70 percent of the raw materials to the re-rolling mills and the rest of the raw materials come from imported melted steel scraps.

 

Meanwhile, country's apex trade promotion body -- the Federation of Bangladesh Chambers of Commerce and Industry, took an initiative to resolve the existing crisis of rod, being faced by the housing and construction industries. Its president sat face-to-face with both the scrap-buyers and the ship-breakers this month and heard their grievances. He said something must be done to address such a nagging issue.

 

Around 100 re-rolling mills in Chittagong and Dhaka have already been shut down and a number of industries are now on the verge of closure following the business practices by a section of ship-breakers. Financial Express

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