Wednesday, 20 October, 2021
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Global hike in raw material cost hits local cement market

Price hike of clinker, the main raw material for cement production, in the international market has affected the price of cement in the local market.

Rising Cost of freight on board (FOB) and cost & freight (CFR) also fueled the cement price in Bangladesh, sector insiders said.

As the production of cement fully depends on the import of raw materials, rising price of raw materials in the global market is forcing the local manufacturers to increase cement price.

Clinker is one of the main raw materials for making cement. The cost of imported clinker has soared to $54 per tonne from $42. In other words, the cost of importing per tonne of clinker has increased by $12.

This rising trend in clinker price is still continuing.

Amid the price hike of raw materials, the price of cement has increased by around Tk 50-55 per sack in the local market, according to traders.

 “Bangladesh fully depends on imported raw materials for manufacturing cement. Due to this, the price of cement and other construction materials depends on the fluctuations in raw material price in the global market,” Bangladesh Cement Manufacturers Association (BCMA) President Md Alamgir Kabir said.

Alamgir Kabir, also the managing director of Crown Cement, said infrastructure and development work has begun fully around the world as the corona situation is improving.

Besides, the demand for construction materials has increased significantly in the Asia region.

“But the production or exploration of key raw materials for cement has not been at the expected level during the pandemic. This created a big gap between the demand and supply of raw materials,” said the BCMA President.

Cement manufacturers said the production cost of clinker has increased due to a rise in the price of coal used in clinker production in the international market.

Earlier, Bangladesh Cement Manufacturers Association expressed its concern over the continued rise in the price of raw materials in the international market.

In a statement, BCMA said it is not possible to sell cement at reasonable prices due to intense competition in the cement sector in the domestic market.

But there is no chance of a monopoly. Only when there is an increase in price in the international market, there is likely to be an impact on the country, it noted.

“Adjustments in the additional tax imposed by the National Board of Revenue can help increase cement sales,” BCMA officials suggest as a way to keep the cement price reasonable.

According to local market producers, the price of a sack of cement has increased to Tk 390-410 from Tk 360-380.

Bashundhara Cement Chief Marketing Officer Khandker Kingshuk Hossain said every local cement manufacturer had to adjust cement price in line with the rising global price.

There are 34 cement manufacturers in the country --- of which five are multinational and the rest are local. Their total production capacity is 61 million tonnes per year, which is higher than the local demand.

Bangladesh is investing heavily in infrastructure development, especially in power generation, highways, bridges, buildings, and mega structures.

As the demand is growing, local cement and steel manufactures are contributing significantly to the nation’s development.