Cement makers in trouble as demand falls due to rise in output costs
Thursday, 8 November 2007
Cement manufacturers are in trouble due to a slump in construction activities against the backdrop of a steady rise in output costs, reports bdnews24.com.
"Local demand for cement is very poor. It appears that the construction sector is in depression due to decline in construction work in both the public and private sectors," said Shankar Kumar Roy, deputy general manager of Holcim Bangladesh.
Manufactures said that construction activities, especially housing, fell on fears of an anti-corruption crackdown in the wake of the 1/11 changeover.
According to the Real Estate and Housing Association of Bangladesh (REHAB), an umbrella of real estate builders, sales of flats in terms of volume dropped about 50 per cent.
Shankar also said that the steady rise in the prices of clinker in the global market also affected the sector, leading to the small local factories underutilising their installed capacities because of higher production costs.
"Clinker prices are rising partly because of increased construction activities in India and China," he said.
Industry operators said that prices of clinker, one of the main raw materials to manufacture cement, grew by $10 a tonne to $64-67 early November from $54-$57 in January.
Higher prices for gypsum, coupled with increased freight charges because of petroleum price hike, also pushed production costs up. Now each bag of cement is selling at Tk 330-Tk 365 in the retail market.
"However, we are not so much affected because of our exports as well as supply contracts to long-term large-scale projects. But I feel local small factories are in trouble," Shankar said.
Mostafa Kamal, president of Bangladesh Cement Manufacturers Association, said that they were in an 'awkward situation'.
"We are very uncomfortable. Prices of raw materials are going up in the international market while demand in the local market is on the downturn," said Kamal, also chairman of Meghna Group of Industries, which produces the 'Fresh' brand of cement.
"We are being forced to cut production due to low demand," he said.
A local entrepreneur, who preferred not to be named, said, "Sales are slowing. I sold about 800 tonnes of cement a day in January. Now the volume of sales has declined to nearly half."
"All local mills are at the risk of losses. But we have nothing to do except wait and see," he said.
About 40 cement-manufacturing companies are in operation. Yearly market volume is about 8.0 million tonnes, industrialists said.
"Local demand for cement is very poor. It appears that the construction sector is in depression due to decline in construction work in both the public and private sectors," said Shankar Kumar Roy, deputy general manager of Holcim Bangladesh.
Manufactures said that construction activities, especially housing, fell on fears of an anti-corruption crackdown in the wake of the 1/11 changeover.
According to the Real Estate and Housing Association of Bangladesh (REHAB), an umbrella of real estate builders, sales of flats in terms of volume dropped about 50 per cent.
Shankar also said that the steady rise in the prices of clinker in the global market also affected the sector, leading to the small local factories underutilising their installed capacities because of higher production costs.
"Clinker prices are rising partly because of increased construction activities in India and China," he said.
Industry operators said that prices of clinker, one of the main raw materials to manufacture cement, grew by $10 a tonne to $64-67 early November from $54-$57 in January.
Higher prices for gypsum, coupled with increased freight charges because of petroleum price hike, also pushed production costs up. Now each bag of cement is selling at Tk 330-Tk 365 in the retail market.
"However, we are not so much affected because of our exports as well as supply contracts to long-term large-scale projects. But I feel local small factories are in trouble," Shankar said.
Mostafa Kamal, president of Bangladesh Cement Manufacturers Association, said that they were in an 'awkward situation'.
"We are very uncomfortable. Prices of raw materials are going up in the international market while demand in the local market is on the downturn," said Kamal, also chairman of Meghna Group of Industries, which produces the 'Fresh' brand of cement.
"We are being forced to cut production due to low demand," he said.
A local entrepreneur, who preferred not to be named, said, "Sales are slowing. I sold about 800 tonnes of cement a day in January. Now the volume of sales has declined to nearly half."
"All local mills are at the risk of losses. But we have nothing to do except wait and see," he said.
About 40 cement-manufacturing companies are in operation. Yearly market volume is about 8.0 million tonnes, industrialists said.