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.

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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.