According to CW Research’s 2017 Bangladesh Cement Market Report, cement consumption in the country is expected to increase 9%/year on average through 2021.
The growth is driven by public works in the infrastructure segment and real estate development works propelled by high population growth and urbanisation, says CW Research, the Greenwich, Connecticut, USA-headquartered company that is a leading advisory, research and business intelligence boutique with a global presence and a multi-industry orientation.
The Bangladesh Cement Market Report, part of CW Research’s Cement Industry Country Report series, meets the country-level cement market research needs of small and large businesses, analysts and governments.
It says that the Bangladeshi government is actively seeking to improve national construction through a combination of building new roads and upgrading existing infrastructure. Public works are also favoured for their political impact in improving conditions.
“Political promises have been made around infrastructure and affordable housing. Time will tell if Bangladesh will be able to deliver on these ambitions, so there is some down-side risk. in addition to other smouldering issues,” says Robert Madeira, CW managing director and head of research.
“Nonetheless, it is clear that much remains to be done in terms of construction in the country and the long-term cement demand story is clearly there.”
Overall, public infrastructure projects account for 35% of the country’s total cement consumption. On the private side, the individual, small-scale construction market makes for 40% of the total. The remaining 25% is covered by real estate developers.
The cement market’s outlook remains promising, despite the dependency on clinker imports.
The Bangladeshi cement industry is highly fragmented and counts on more than 40 players of various degrees of industrial size and professionalism. The shortage of quality limestone reserves in the country means that today there is only one integrated cement plant operating in the country, Lafarge Surma.
According to the report from CW Research, even so, this plant is actually importing limestone from India via a conveyor belt across the border.
All other cement manufacturers operate grinding plants using imported clinker. These grinding stations range widely in size and commercial sophistication, from small mini-mills to enterprise-level grinding plants; capacities range between 0.1 million tons to 5.2 million tonnes.
With such a high dependency on clinker imports, the government has maintained low import duties to foment some domestic value added component in form of grinding, rather than just importing finished cement. Clinker imports are mostly sourced from China, Thailand, Vietnam and Malaysia. Nonetheless, exploration continues to try and identify domestically viable limestone reserves to be able to support clinker production locally.
“It is rare for such a large cement market to be almost entirely dependent on clinker imports for cement production, hence the Bangladeshi cement market is highly susceptible to fluctuations of clinker supply and prices,” says Raluca Cercel, CW’s senior consulting analyst.
“Moreover, electricity supply is inconsistent, having forced manufacturers to build their own captive power supply to be able to grind raw material.”
For 2017, cement capacity is forecasted to reach over 35 million tonnes. Cement manufacturers, including S. Alam Cement Mills; Aman Cement Factory; Olympic Cement; Eastern Cement; Aramit Cement; Alam &Co; Chhatack, and Cement, among others, are providing an additional 3.4 million tonnes of cement to the existing capacity in the coming years.
Cement production units are concentrated close to Dhaka and Chittagong, as these cities are the largest consumers in the domestic market.
Despite the dependency on clinker imports to meet cement production needs, Bangladesh’s outlook for the future remains positive.
As Raluca Cercel emphasises: “The market has continued to thrive, and is expected to continue doing so in the coming years.”
