recently. Vietnam and Iran are already among its main export destinations, and Saudi Arabia recently joined them by announcing that it will export clinker to Bangladesh. In addition, MI Cement, Chhatak Cement and Saudi partners have also announced production upgrades. Also, just before Christmas, Shah Cement inaugurated the vertical roller mill for the world's largest 8.1m mill stand at its Muktarpur facility in Munshiganj district. Md Shahidullah, vice president of
Bangladesh Cement Manufacturers Association (BCMA), told local media that the local cement industry was running well in 2018, with cement sales increasing to 33 million tons, up 12% year-on-year.
According to the data of Global Cement Network, Bangladesh has eight cement plants with a comprehensive production capacity of 8.4 million tons per year, and the main producers are Chhatak Cement and Lafarge Surma Cement. Domestic clinker accounts for about 20% of the national demand, and the remaining 80% is imported from abroad. Therefore, the cement industry in Bangladesh is mainly concentrated in grinding plants, with more than 30 grinding plants. A market report issued by EBL Securities in mid-2017 estimated the local cement production capacity at 40 million tons per year, but due to problems such as power supply, the actual production in 2016-2017 was about 32 million tons per year. It is worth noting that clinker imports reached 518 million US dollars in 2017-2018, an increase of 9% over the same period last year, the highest level since 2014. Taking into account the exchange rate, the increase was not in line with actual consumption, as the local currency Taka depreciated against the US dollar in 2017 and 2018.
Back in 2016, the dominant players in Bangladesh's cement industry were Shah Cement, Rahau Bengal, Bashundhara Group, Seven Rings Cement and Heidelberg Cement, which accounted for about half of the market. Among them, Lahau Bangladesh's revenue in Bangladesh nearly doubled to $101 million in the first half of 2018, and its profit doubled to $6.3 million from $2.7 million in the previous year. The company is a joint venture between LafargeHolcim and Cementos Molins of Spain.
Bangladesh is suitable for a grinding-based cement industry because of its low limestone reserves and easy access to waterways. In some ways, though, this is a microcosm of the future cement market in Bangladesh. The lack of raw materials meant it was focused on grinding, and a player with a surplus of clinker happened to enter the market. The market is oversaturated due to the low cost of setting up grinding plants and cement trade. In theory, this should be good for the end consumer and the general development of the country. After all, Bangladesh has a large population of 164 million people and a low GDP per capita of $4,561, as well as a similarly low per capita consumption of cement. But the downside is dependence on external raw materials. Any change in the exchange rate or the supply of raw materials will put the entire industry at risk or make prices volatile. Saudi exporters could bring some interesting changes to an already crowded market.
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