Bangladesh's steel manufacturers today demanded an immediate rollback of the latest electricity tariff increase, warning it would raise mild steel (MS) rod production costs by up to Tk 3,560 per tonne and slow economic activity.

The government raised electricity tariffs for industrial consumers by around 17 percent starting from this month.

"The new tariff alone will increase steel production costs by around Tk 1,785 per tonne,” said Mohammad Jahangir Alam, president of Bangladesh Steel Manufacturers Association (BSMA).

At a press conference organised by the BSMA in Dhaka, industry leaders say the move comes at a time when steel makers are already under pressure from weak demand, high borrowing costs, a depreciating taka, gas shortages, and difficulties in opening letters of credit.

When VAT, port charges, fuel, transportation and higher prices of ferro-alloys and other consumables are factored in, the additional cost could reach Tk 3,560 per tonne, Alam added.

He said 60-grade MS rod — the most widely used steel product in construction — currently sells at Tk 91,000–92,000 per tonne at retail and could rise to at least Tk 97,000 per tonne following the cost increase.

"The impact of higher steel prices will fall directly on the construction and infrastructure sectors. As project costs rise, both public and private investment could slow," Alam said.

BSMA said the industry has attracted investments of more than Tk 1 lakh crore and employs around one million people.

Around 40 modern steel mills and more than 150 re-rolling mills have a combined annual production capacity of about 1.22 crore tonnes, but domestic demand stands at around 50 lakh tonnes, leaving mills running at less than 50 percent capacity.

Since government development projects consume around 60 percent of steel, BSMA urged the government and BERC to immediately reconsider the electricity tariff hike.

Secretary General Sumon Chowdhury and former president Manwar Hossain also addressed the press conference