The cement industry in Bangladesh is facing a critical crisis, with overcapacity, weak demand, and financial strain pushing producers to the brink. Despite a surge in production capacity over the past decade, driven by optimism for megaprojects and housing market growth, the market has become saturated, leading to a glut of unsold cement and plummeting prices. This has resulted in a dire financial situation for cement manufacturers, with many plants operating at less than 30% of their capacity, far below the global standard of 70-80%.
The situation has been exacerbated by the post-COVID-19 economic landscape, where construction activity has slowed significantly. Investors poured substantial funds into expansions, expecting robust demand, but the reality has been a stark contrast. In 2024, cement consumption was only 3.8 crore tonnes, which is less than 40% of the total capacity. This year, the situation has worsened, with factories forced to cut production and lay off workers.
Industry leaders, such as Amirul Haque from the Bangladesh Cement Manufacturers Association (BCMA), highlight the severe cash flow crisis faced by entrepreneurs. Small plants have already shut down, and major players like Bashundhara Cement and Mir Cement are struggling to stay afloat. Bashundhara Cement, with an annual capacity of 7.3 million tonnes, is operating at just 20% utilization, incurring losses despite reduced manpower and slashed prices. Similarly, Mir Cement, which expanded its capacity to 18 lakh tonnes in 2023, is now facing a dire situation as sales have plummeted, forcing production cuts to a quarter of its total capacity.
The top producers, such as Shah Cement, part of the Abul Khair Group, are not immune to the challenges. With an annual capacity of 10 million tonnes, Shah Cement continues to operate at over 50% utilization, but it faces growing price and demand pressures. Premier Cement, another major player, has seen a slowdown in construction projects, leading to a utilization rate of around 40%. Crown Cement and Meghna Group of Industries, despite showing some resilience, are still grappling with idle capacity and falling demand.
The financial strain is further compounded by rising costs and falling prices. A 50kg bag of cement now sells for Tk470-500, which is Tk25-30 less than a year ago. Imported raw materials, such as clinker and gypsum, have become more expensive, while policy rate hikes by the Bangladesh Bank have sharply increased borrowing expenses. The industry has invested around Tk45,000 crore, with about 70% financed through bank loans, and revenues are falling while loan repayments and interest costs climb.
As a result, many firms are unable to pay suppliers or sustain payrolls. The industry employs approximately 7-8 lakh workers directly and another 2 lakh indirectly, and with factories scaling down or closing, thousands of jobs are at risk. Industry leaders have called for government intervention, urging the revival of stalled projects, easier import procedures for raw materials, and financial relief for struggling firms.
Despite the current challenges, BCMA President Amirul Haque emphasizes the long-term need for urban housing and infrastructure in Bangladesh. He believes that with improved project spending and credit access, the sector can recover. However, until demand revives and financial costs ease, the cement industry in Bangladesh faces one of its most challenging periods, with the potential for further closures and defaults.
