Investigators are saying that Bangladesh Steel Re-rolling Mills (BSRM) used a letter of credit (L/C) in a deal that made it the main offender behind an increase in iron rod prices in the local market.

The price hikes are causing turbulence in the iron rod market in Bangladesh and causing delays in construction work.

Price hike

Iron rod prices have rocketed up around 45 per cent within few days, according to reports that add that this has had severe impact on major government development programmes.

Volatility in the iron rod market is also said to be particularly affecting the housing sector.

L/C use

An investigation into the price hike of the iron rod has reportedly revealed that BSRM had opened an L/C for 10,000 tonnes of billet at US$500 per tonnes in January 2008, which was scheduled to reach Bangladesh in late March.

But BSRM announced an increase in the price of iron rod in early March, a move that prompted other manufacturers to follow suit by announcing similar price rises.

Intelligence reports

Local media are quoting an intelligence report that says BSRM illegally increased the price of iron rod that it had imported at a lower rate by prior L/C arrangements. "The BSRM increased the price of iron rod for making extra profit," the report said.

Officials are reportedly suggesting that the government should take stern action against the BSRM and other steel mills for profiteering.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.