A New Era for the Indian Subcontinent? Part 3: Bangladesh

Read part one on India and part two on Pakistan.

Bangladesh
Challenging times

“The Bangladesh cement market is quite challenging at the moment as political instability threatens its growth,” says Ugarte Marcelino of HeidelbergCement (Singapore). “If the two main political parties can sort out their differences, the country should progress nicely. But we do not know what will happen in the next few years. Cement demand is flat vs the same period last year (1H13 vs 1H12). Depending on the monsoon, we may have a slight growth compared with 2012.” Holcim runs an active business in the country with a 1 million tpa grinding facility. A spokesman for the Group said, “We are building our next capacity step, which will be commissioned early in 2014. There is no serious threat to our business nor the industry by terrorist activity.”

The country’s cement producers are searching for new export markets, especially at present. The export market is fully dependent on the northeast states of India and recently there have been some problems. In July of this year, shipments to India almost halved due to the steep fall of the rupee. “Our exports to the Northeast states of India fell by 45 – 50% in the run up to July,” said Alamgir Kabir, Managing Director of MI Cement. Ali Bashar, Managing Director of Seven Circle (Bangladesh), said the trend may continue until the Indian importers adjusted their local price with the depreciated value of the rupee. In good times, Bangladesh exports 15 000 – 20 000 t of cement per month to India. Pakistan’s cement production capacity is about 22 million tpa, while the annual demand is some 16 million t.

Meanwhile, Shah Cement Ind. Ltd, said to be one of the country’s largest cement companies with a capacity of 4.2 million tpa, is proud of its high-tech bagging plant from Starlinger, which turns out stitch-free bags as ‘micro perforated AD Star bags’.

An interesting development arose in June of this year when Dwi Sucipto, the CEO of Semen Indonesia, announced that his company was planning to acquire a cement plant in Bangladesh. This plant, together with the company’s two plants in Indonesia and the plant in Vietnam, would increase Semen Indonesia’s total production to 30 million t. The Indonesian company has said that it is looking to acquire more plants in Southeast Asia, including Bangladesh.

A recent article by the Economist Intelligence Unit in The Economist confirmed the importance of cement production to meet the demands of the rapid rise in urbanisation coupled with the strong growth in construction. It mentions that industry experts expect the cement industry will grow by an average of 20 – 25% over the next five years. Bangladesh has become one of the largest importers of clinker and limestone in the world, with an estimated 10 – 15 million tpa arriving from India, Thailand, Indonesia, the Philippines and China. Of course, there is the famous 17 km cross border conveyor that carries limestone and shale from Meghalaya in India to the 1.5 million tpa Lafarge Surma plant that is located about 270 km from Dhaka, one of the world’s fastest growing cities. It is interesting to note that the combined market share of the four international majors, i.e., Lafarge, Holcim, HeidelbergCement and Cemex, is less than one-third of the total market, which is dominated by local companies. Ten years ago clinker imports totalled US$150 million; today the figure is US$504 million.

Essential upgrades

Bangladesh badly needs to improve its infrastructure. In June 2013, the Asian Development Bank announced that it would provide a credit of US$198 million to support the upgrading and improvement of a 70 km section of the Dhaka-Northwest highway. The initiative will also upgrade land ports at Benapole and Burimari, which handle the bulk of goods transported between Bangladesh and India.

It is well known that Bangladesh suffers major flooding and other natural disasters, The World Bank recently approved US$400 million to upgrade the country’s embankment system by increasing the area protected in polders from storm surges and flooding in six coastal districts. Some 17 polders will be rehabilitated in six coastal districts to provide protection for 760 000 people living within the polder boundaries. The 8.5 million people who live in these coastal areas should also benefit through agricultural development, employment and food security.

Written by Paul Maxwell-Cook. This is an abridged version of the full article, which appeared in the October 2013 issue of World Cement. Subscribers can view the full article by logging in.

Read the article online at: https://www.worldcement.com/asia-pacific-rim/25092013/a_new_era_for_the_indian_subcontinent_cement_sector_3_210/