Total 42 companies, seven listed, four multinationals
The consumption of cement, one the key construction materials, has increased in the country amid growing urbanization, real estate business, and large-scale development projects of the government.
According to Bangladesh Cement Manufacturers Association (BCMA), breaking the previous record, cement sale was the highest 33 million tons in 2018, up from 29 million tons in 2017 — an around 12% rise.
The BCMA data shows that the consumption of cement across the country posted an average growth of 10-15% in the last 10 years.
Against the global trend
According to On Field Investment Research (OFIR), the first independent research organization dedicated to Global Building Materials, based in London, the global demand for cement declined by 2.8% in 2018, while Bangladesh posted a 12% growth in the year.
OFIR projects that in 2019 global cement demand might fall by 1.6%, while BCMA sees the annual growth of 10% to continue at least for the next five years.
Md Shahidullah, vice-president of BCMA and managing director of Metorcem Cement, is optimistic about market growth in the country as the government is implementing many infrastructural mega projects including bridges, rail lines, power plants, and metro rail.
“Besides the big projects, developments in real estate and commercial and public institutions have also contributed to enhanced cement consumption. Moreover an increasing number of migrants traveling from rural areas to the big cities are boosting real estate business while the rural individual homebuilders are fueling consumption of cement,” he says.
According to “Bangladesh Cement Market Report 2017”, published by CW Research, a US-based research organization that conducts market research for the global cement industry and related sectors: “In 2017, 35% of consumed cement in Bangladesh was used in infrastructure development, while 40% and 25% were used in individual homebuilding and real estate sector respectively.”
Speaking to Dhaka Tribune, Md Alamgir Kabir, president of BCMA and managing director of Crown Cement Concrete and Building Products, said: “Every year, the market size of cement is growing. Last year, our sales posted record growth but it is still far below those of many developing countries. So, there is scope for us to grow further.”
“Average per capita cement consumption in the world is 500 kg while in Bangladesh it is only 190 kg as of 2018. According to a global study, per capita cement consumption could be 600 kg at best and after that the growth will slow down. So, there is an opportunity to triple the per capita cement consumption in our country. And we the local cement manufacturers are expanding our production units to grab the market.”
Local companies hold 82% of market beating multinationals
The development of local cement industry started during the early fifties. Till 1990 about 95% of the country’s demand for cement was met with imports. About 20 years ago, local entrepreneurs used to produce only ordinary cement using 95% to 96% clinker.
But, the situation has significantly changed, with local companies now holding 82% of the market share due to their competitive advantage in price and quality, shows BCMA data.
As many as 76 cement manufacturing companies have been registered, but 42 large and small scale companies of them are producing cement as of now.
Of the 42 companies, seven are listed with the share market and four are multinationals. Once the market was dominated by foreign companies which are now facing intense competition with the local ones.
Two of the global cement groups — UAE-based Emirates Cement and Mexico-based Cemex — winded up their Bangladesh operations failing to penetrate in the market.
Among the existing 42 market players, the cement industry is dominated by only ten companies including two multinationals, holding around 80% of the total market share, according to BCMA data. Of them, Lafarge Holcim got the second place on the top-ten list through acquisition of Holcim by Lafarge Surma.
Market shares of companies
According to a recent study by EBL Securities, Shah Cement holds 14% of the market share, while Lafarge Holcim holds 11.8%, Bashundhara Group 9.1%, Seven Rings Cement 8.1%, Heidelberg Cement 8%, Premier Cement 6.6%, MI Cement’s brand product Crown Cement 6.6%, Fresh Cement 6.5%, Akij Cement 4.2%, and Confidence cement 2%.
According to industry insiders, despite multinationals weak business, a Saudi business firm is set to enter the market.
The local companies are also increasing their capacity. According to the MI Cement, the company is set to increase its production by 76% by 2021, taking the current production of 11,000 tons per day to 19,400 tons.