lafarge surma cemnt
Current Industry Highlights
With growing infrastructure need of the country, cement demand growth surpassed economic growth rate of Bangladesh over the years.
The Industry is highly concentrated. Out of 34 cement companies, large 10 companies control more than 70 percent of the total cement production in Bangladesh.
Contractionary monetary policy discouraging credit flow to the unproductive sectors like real estate will make the housing loan more costly.
However, the government investment on transportation and housing infrastructure development is expected to keep the demand growth intact for that sector. Power disruption and energy price hike have been taking a toll on capacity utilization and operational cost in this sector.
Key input costs hike like the prices of clinker & freight and currency depreciation have already hurt in 2011.
Though the industry has supply overhang, which is more than 12 million metric ton and mostly belong to tiny players, Incumbent players are investing heavily in capacity additions to meet the expected demand from mega projects. But the bubbles in the real estate sectors, inefficient ADP (Annual Development Program) implementation and mega projects uncertainty hurt the top line growth of the companies.
Exhibit 1: Bangladesh far behind the major economies on cement consumption
Source: CMAI, BCMA, PCMA, VCMA, Vharatbook.com. International cement review and meeting with Lafarge Surma Cement Limited.
Exhibit 2: The industry has supply overhang
Installed Cap (mt/d) Actual Production (mt/d) Capacity Utilization (%)
Company
2009
2010
2011
2009
2010
2011
2009
2010
2011
Confidence
1600
1600
1600
695
744
998
43.44%
46.50%
62.38%
Heidelberg
7000
7000
7000
3527
3879
4449
50.39%
55.41%
63.56%
Meghna
3333
3333
3333
1862
2762
3360
55.87%
82.87%
100.81%
MI Cement
2800
2800
2800
1500
With growing infrastructure need of the country, cement demand growth surpassed economic growth rate of Bangladesh over the years.
The Industry is highly concentrated. Out of 34 cement companies, large 10 companies control more than 70 percent of the total cement production in Bangladesh.
Contractionary monetary policy discouraging credit flow to the unproductive sectors like real estate will make the housing loan more costly.
However, the government investment on transportation and housing infrastructure development is expected to keep the demand growth intact for that sector. Power disruption and energy price hike have been taking a toll on capacity utilization and operational cost in this sector.
Key input costs hike like the prices of clinker & freight and currency depreciation have already hurt in 2011.
Though the industry has supply overhang, which is more than 12 million metric ton and mostly belong to tiny players, Incumbent players are investing heavily in capacity additions to meet the expected demand from mega projects. But the bubbles in the real estate sectors, inefficient ADP (Annual Development Program) implementation and mega projects uncertainty hurt the top line growth of the companies.
Exhibit 1: Bangladesh far behind the major economies on cement consumption
Source: CMAI, BCMA, PCMA, VCMA, Vharatbook.com. International cement review and meeting with Lafarge Surma Cement Limited.
Exhibit 2: The industry has supply overhang
Installed Cap (mt/d) Actual Production (mt/d) Capacity Utilization (%)
Company
2009
2010
2011
2009
2010
2011
2009
2010
2011
Confidence
1600
1600
1600
695
744
998
43.44%
46.50%
62.38%
Heidelberg
7000
7000
7000
3527
3879
4449
50.39%
55.41%
63.56%
Meghna
3333
3333
3333
1862
2762
3360
55.87%
82.87%
100.81%
MI Cement
2800
2800
2800
1500