Bangladesh Cement Sector Update (Dec 2016)

Bangladesh Cement Sector Update (Dec 2016)

This is a brief summary of an article that appeared on The Prothom Alo newspaper on 10
Dec 2016. I have also added some information from The Daily Star and other secondary
sources too. It is for information only.

Market Size: The estimated market size in 2016 is around 200 Trillion BDT (in terms of
value) and 250 Mn Metric Tons (in terms of volume).

Market Size 2015 2016

Volume: Mn Metric Tons 210 250
Value - Mn BDT 168,000 200,000

Out of 33 operational cement manufacturers in Bangladesh, 12 companies have around

80% market share. The top companies’ market share is as follows:

Company Name Market Share

Shah Cement 14%
Bashundhara Cement 10%
Seven Rings Cement 8%
Fresh Cement 7.50%
Heidelberg * 7%
Premier Cement * 6.90%
MI Cement * 6.70%
Lafarge * 5.75%
Holcim 4.30%
Akij Cement 4.30%
Madina Cement 3.30%
Confidence Cement * 2.21%
* Means listed on Dhaka Stock Exchange (Meghna & Aramit Cement not in Top 12)

 After merger of Lafarge and Holcim, Lafarge could have a market share of 10%

Following are profit and EPS of listed cement companies from DSE web site:
Profit in Mn BDT EPS Divdend

Lafarge - '15 2,290 1.97 10% C

Heidelberg - '15 1,402 24.80 300%C

MI Cement - '16 744 5.00 20%C

Premier - '16 684 6.50 15%C

Confidence - '15 326 7.25 27.5%C

Meghna - '15 64 2.84 15%C

Aramit - '15 16.50 0.50 10%C

Capacity: The total installed capacity of cement production in Bangladesh is about 35

million metric tons per year and the effective capacity is around 25 million metric tons per
year.

Usage: Cement is being used in the following categories (although the numbers seems
quite strange):
Cement Usage %
Private Housing 40%
Govt Housing 27%
Real Estate 20%
Govt Infrastructure Projects 6%

From another report (of 2015), I got the following data:

Cement Usage %
Private Housing 25%
Commercial Real Estate 30%
Public Organizations 45%

Seasonality: Cement usage declines during the Rainy Season.

Other Information: Bangladesh was the largest importer of clinker globally in FY 2014.

Following information is from The Daily Star (on 1 Dec 2016):

http://www.thedailystar.net/business/lafarge-surma-gets-nod-expand-production-1323109
Lafarge Surma Cement's mining company in Meghalaya has received environment clearance
from the Indian government to more than double its yearly limestone production capacity to
50 lakh tonnes.
Meghalaya-based Lafarge Umiam Mining Pvt Ltd, a fully owned subsidiary of Lafarge Surma
Cement, got the clearance to produce and transport a maximum of 20 lakh tonnes of
limestone a year to the manufacturing plant in Bangladesh.
The approval will allow Lafarge Surma, manufacturer of Supercrete-branded cement in
Bangladesh, to expand its production capacity.
At present, Lafarge Surma has the capacity of producing 15 lakh tonnes cement and 12 lakh
tonnes clinker a year.
The company will need more limestone, the raw material for producing clinker, in the
coming years as Lafarge and Holcim have started the merger process of their cement
companies in Bangladesh in line with their global amalgamation plan, said an official.
World's leading cement makers, France's Lafarge and Switzerland's Holcim, merged in July
last year to form LafargeHolcim, which owns the majority stake in Holcim Bangladesh.
LafargeHolcim and Cementos Molins of Spain together own Surma Holding, which is a
majority shareholder of Lafarge Surma Cement in Bangladesh.
“Also, the demand is increasing in the local market and to fulfil the domestic requirements
we will have to expand our business in the coming days,” the official said.
-
Type of Cement: Due to lower requirement of clinker, the core material, Portland
Composite Cement (PCC), is widely produced around 95 per cent, substituting Ordinary
Portland Cement (OPC) which is around 5 per cent of the industry.

Future Expectations:
With major governmental infrastructure projects ongoing, experts forecast growth in this
industry.
Another thing mentioned was that Bangladesh has one of the lowest cement consumption
per capita when compared with other countries. However, I do not know whether this is a
"sure" sign of future growth potential.
Rather as Bangladesh has a high need for basic infrastructure, housing and services, we
could say that there is potential for growth in the demand for cement.