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A prime recipe for building construction – cement – continues to be high in demand spurred by the mega development spree the country is going through.
The government infrastructure projects, rapid urbanisation and real estate development are driving the growth of cement industry that keeps up 15 per cent upswing year on year in spite of a series of challenges.
Even during the pandemic year, the sector did not feel much pinch as did the other sectors, but the rising inflation word wide is shooting up the raw materials’ price that might dampen the steady success over the years.
Whereas a higher per capita income along with a sustained political stability is contributing to the overall economic development, the cement industry is playing its part too.
According to Bangladesh Cement Manufacturers Association (BCMA), there are 76 cement manufacturing companies in the country. Per capita cement consumption is around 200 kilogramme, and 61.02 million tonnes of cement were produced in 2019.
Digging into past
Once Bangladesh was fully dependent on cement import, but since 1990s, a host of local manufacturers stepped into cement production that is satisfying local consumption needs.
Confidence Cement Ltd, Hyundai Cement Bangladesh Ltd, Meghna Cement Mills Ltd of Basundhara Group, Ahad Cement Factory Limited, Aramit Cement Limited, Mongla Cement Factory Ltd of Sena Kalyan Sangstha, Diamond Cement Limited, Lafarge Surma Cement Ltd and Eastern Cement Ltd are some household names as cement makers.
In 1920s, a good number of large, medium and small companies such as Shah Cement Ltd, MI Cement Factory Ltd (Crown Cement), Unique Cement Industries Ltd of Meghna Group, Premier Cement Ltd, Seven Circle (Bangladesh) Ltd, Heidelberg Cement Bangladesh Ltd, Holcim (Bangladesh) Ltd, Royal Cement Ltd and Cemex Cement Bangladesh Ltd joined the squad, adding to the inventory.
The major cement grinding zones are located at Munshiganj on the bank of River Dhaleshwari; Narayanganj on the bank of River Shitalakkhya; Meghnaghat on the bank of River Meghna, Chattogram and Mongla. Besides, two clinkerization plants are located in Chattak and in Sunamganj.
“Even 20 years ago, Bangladesh relied much on import. Now local companies are meeting domestic demand fully. We are now exporting cement as well,” Managing Director of Premier Cement Mills Limited Mohammad Amirul Hoque told The Business Post.
Market share of local companies
Some 10 companies hold 71.99 per cent market share in Bangladesh. Of them, Shah cement holds 12.96 per cent market share; King Basundhara 12.13 per cent; Fresh 8.72 per cent; Crown 7.27 per cent; 7-Circle 7.21 per cent; Premier 6.19 per cent; ScanRuby 5.36 per cent; Lafarge 5.16 per cent; Akij 4.10 per cent; and Holcim 2.89 per cent, as per the data of the traders’ association.
There are other players holding 28.01 per cent market share, and the sector witnesses an investment of around Tk 35,000 crore to Tk 40,000 for around 35 million tonnes of cement.
Cement export underway
The country is making cement export to Assam and Tripura of India, Myanmar, Sri Lanka, Nepal, and Maldives alongside meeting local demand.
Around 25,000-30,000 tonnes of cement are exported to India every year.
According to Export promotion Bureau (EPB) data, the country exported cement worth $ 5,484,000.64 in Fiscal Year 2020-21. In FY20, the export value was $ 8,300,000.88.
“The global cement consumption volume is expected to reach 4.42 billion tonnes in 2021 while per capita cement consumption on average globally is 521 kilogrammes,” according to the world largest market research store -- Research and Markets.
Talking to The Business Post, Managing Director of Premier Cement Mills Limited Mohammad Amirul Hoque said around 50 million people are engaged in the sector directly and indirectly.
Asked about the price hike, Amirul said: “When the prices of raw materials for cement go up in the international market, we do commercial adjustment. I call it commercial adjustment, rather than price hike,” he added.
“We produce around 27,000 tonnes of cement per day in our factory, and have invested a lot of money in the sector despite challenges like uninterrupted power and gas supply, plus VAT and Tax challenges.”
Retail market observation
According to a report of Lafarge Holcim Bangladesh Limited signed by its Chairman Christof Hässig on March 14, 2021, the company has made 36 per cent growth in 2020.
Its net profit after tax was Tk 2,361,385,000 in 2020 while the figure was Tk 1,737,454,000 in 2019. Besides, its gross profit stood at Tk 4,606,073,000 in 2020 and Tk 4,531,897,000 in 2019, according to the company data.
Holcim has 4.2 million tonnes of cement production capacity per annum, with fully integrated cement and clinker plant in Chhatak and three grinding plants near Dhaka and Khulna.
Its cement sale went about 33.4 million tonnes in 2020 and is expected to rise in a higher single digit in 2021.
Despite the growth of cement industry, Bangladesh is still one of the lowest consumers of cement products in the world, with per capita cement consumption going around 200 kilogrammes.
Visiting different retail markets in Dhaka, it was noticed that cement was selling at between Tk 420 and Tk 480 per 50kg bag in the first week of November.
Manager Nasir Uddin of Atik traders at Demra said they were selling 50kg Holcim cement at Tk 480, Shah cement at Tk 450, Seven Rings at Tk 440 and Three Rings at Tk 430.
Proprietor of GM Traders at Badda Goalm Mortoza argued that they were selling Crown cement at Tk 440, Insee and Scan cements at Tk 460 each, Fresh and Supercrete cements at Tk 430, and Xtreme at Tk 420.
“The cost of cement has increased by around Tk 50 per sack this year over the previous year. The prices of all products depend on their manufacturers. If they increase the cost, we have to sell at high price too,” he pointed out.
The president of Real Estate and Housing Association of Bangladesh (REHAB) Alamgir Shamsul Alamin said there is a total of 269 linkage industries, including cement, iron, tiles and electric cable.
“Most of the products’ prices have gone up which are likely to leave an impact on the housing sector,” warned the trade leader.
