Cement makers up for expansion

The expansion of the cement industry is underway, thanks to the government's move to materialise its huge plan of building big infrastructure projects such as Padma Bridge, elevated expressway and other road projects.
The industry has been growing at 10-12 percent for the past several years, except for 2007 when demand for this construction material came down to its lowest.
“We expect cement consumption to grow by at least 15 percent in the next several years on rising demand for infrastructure projects,” said Mostofa Kamal, president of Bangladesh Cement Manufacturers Association, and owner of Meghna Group that manufactures Fresh brand cement.
Heidelberg (Bangladesh) that makes Scan and Ruby brands, MI Cement Factory that makes Crown brand and Bashundhara Group, the manufacturer of King brand, have also decided to raise its capacity to have a bigger share of the growing market.
Meghna Group is going to raise its capacity by 4,000 tonnes a day to take production at 11,000 tonnes.
Heidelberg is likely to increase its capacity by 2,000 tonnes a day and Bashundhara 1,000 tonnes, while MI Cement plans to double the existing 3,000-tonne production a day, according to officials of the companies.
Some other big companies are taking a 'wait-and-see' approach to observe how the government moves to carry out its development works.
According to market players, the industry is saturated with nearly 120 companies registered with an annual capacity of 21 million tonnes against demand for around 11-12 million tonnes as per the 2009 consumption pattern.
Cement consumption was nine million tonnes in 2008 and eight million tonnes in 2007, down from 8.4 million tonnes in 2006 because of less demand from the construction sector.
Cement consumption rose three times higher in just 10 years -- between 1999 and 2009. Per capita consumption was just 22 kilograms in 1999, which reached over 65 kilograms in 2009.
Real estate companies and individuals are the main consumer of cement, manufacturers said, pointing to the fact that government projects consumed a little during the past decade.
They said the companies plan to expand despite a saturated market, mainly because of reducing their production costs.
“We want to strengthen our foothold in the market by slashing production costs,” Kamal said.
Alamgir Kabir, managing director of MI Cement Factory, said his company is trying to reach its optimum level.
“Raising the capacity will help us reduce production costs,” Kabir, also a vice president of the manufacturers' association.
The Crown brand cement maker will also boost its export to Northeastern India, he added.
Of the 120 cement companies registered with the relevant government agencies, around 80 companies are in operation. Some small manufacturing plants in northern and southern parts of the country had already been shut down in the last few years, as those lost out their competitiveness to big players.
Multinational Heidelberg Cement meets 13 percent of Bangladesh's demand from its two plants in Dhaka and Chittagong. Another multinational company Holcim (Bangladesh) has an 8 percent market share in Bangladesh and 17 percent in capital Dhaka, according to website data.
sajjad@thedailystar.net