Cement manufacturers fear further price hikes

Cement manufacturers are worried that their products will see another round of price hikes due to a cost escalation.

Price hike is negative for the industry as it causes less sale of cement bags, reduces capacity utilisation and increases fixed cost against each bag of cement, said Alamgir Kabir, president of Bangladesh Cement Manufacturers Association (BCMA).

The cost escalation is mainly due to a significant increase in international freight charge, while raw material cost is still moderate, according to the industry people.

They said at Chattogram Port the cost including freight value of each tonne of clinker, the raw material for manufacturing cement, has already increased to $60-62, from $56-57 a few days ago.

Besides, freight charge to bring a tonne of clinker from Indonesia, Vietnam, or the Middle-Eastern sources has been increased to $26-28, from $20-22 over recent months.

BCMA has expressed concerns about the rising trend of maritime freight rates.

In recent years, no freight charge increase lasted for long and that is why the local industry was able to keep the prices of their products low.

But this year, the freight charge rise is still continuing and the industry cannot afford to keep prices of their product low, BCMA said in a statement on Thursday.

Bangladeshi cement manufacturers depend on imported raw material and they had to increase price by more than 10% in February-March to offset their increased cost.

However, BCMA believes, rationalising excessive taxes would help the companies, consumers and the economy through increased sales and net revenue.

Adjusting double taxes, halving import duties to Tk250 per tonne of clinker are among the requests the association pursued to the National Board of Revenue.

Bangladesh has three dozen local and multinational cement manufacturers in production.

Against four crore tonnes of annual demand, the industry already expanded its annual production capacity to 8.4 crore tonne.

The industry's aggregated investment of around Tk42,000 crore has created jobs for several hundred thousands of people directly or indirectly, said BCMA.

The cement industry contributes more than Tk5,000 crore to the national exchequer annually.

Bangladesh, which is at the bottom of the regional table in terms of per capita cement consumption, has been exporting cement for the last 15 years.