{"id":1786,"date":"2022-02-03T06:51:24","date_gmt":"2022-02-03T06:51:24","guid":{"rendered":"https:\/\/mircement.com\/?p=1786"},"modified":"2024-08-21T18:25:37","modified_gmt":"2024-08-21T18:25:37","slug":"covid-19-impact-on-cement-industry","status":"publish","type":"post","link":"https:\/\/mircement.com\/blog\/covid-19-impact-on-cement-industry\/","title":{"rendered":"How Covid-19 Impacted the Cement Industry Globally and in Bangladesh?"},"content":{"rendered":"

The world economy suffered terribly due to the emergence of Covid-19. The pandemic quickly took over the whole world as it is highly transmissible, disrupting the workflow and closing down workplaces and factories. Governments imposed lockdown protocols to contain the spread of the deadly virus. As a result, workers around the world suddenly had no jobs and no earning sources.<\/span><\/p>\n

The cement industry also fell victim to the deadly grasp of the virus. Construction works were halted, thus cement consumption was reduced rapidly. The cement industry is one of the most important industries, especially in the Asia-Pacific region. Any disruption in this sector can widely influence the lives of thousands of people who are closely linked with the industry.<\/span><\/p>\n

Impact on Cement Industry During Covid-19<\/b> Globally<\/b><\/span><\/h2>\n

It is challenging to outline the full effect of the pandemic on the global cement industry as the pandemic is not over yet. The initial lockdown phases created havoc in this sector as all production plants were completely shut off. However, the short-term direct effects are now being observed.<\/span><\/p>\n

Impact on Demand<\/b><\/h3>\n

The global cement demand shrank 3% year-on-year, including China, and 6.5% year-on-year, excluding China 2020. Experts are saying that the <\/span>impact on the cement industry during Covid-19<\/span> is unevenly distributed as some countries are expected to be more resilient than others.<\/span><\/p>\n

Utilization Rate<\/b><\/h3>\n

Due to economic slowdowns, the industry was not operating at total capacity even before the pandemic. Moreover, cement plants are expected to see additional drops in utilization rates. The utilization rate fell to around 60% in 2020 as the demand became significantly lower. However, many cement producers were expected to expand beyond 2021, but it will largely depend on the post-Covid-19 economic recovery.<\/span><\/p>\n

Stock Prices<\/b><\/h3>\n

In 2020, the stock prices of major cement producers<\/span><\/a><\/span> fluctuated by an average of almost 50%. Fluctuations in the foreign exchange rate during this period also deteriorated the profit margins of cement producers in emerging markets as it increased the energy cost and cost of servicing debts in hard currencies.<\/span><\/p>\n

Source:<\/span> IFC<\/span><\/a><\/em><\/p>\n

Impact on Cement Industry During Covid-19<\/b> in Major Cement-Producing Countries<\/b><\/span><\/h2>\n

China was the first country that enter lockdown phases back in February 2020. But February is the month of the Chinese New Year Celebration and construction sites are often closed over this period as workers return home for festivities. As a result, the effect of lockdowns on the industry was much more muted than in countries like India, where lockdowns occurred at a very active period of construction works, ahead of the monsoon season.<\/span><\/p>\n

By the month of April, the cement industry in China was experiencing slightly more demand compared to the previous year., which made up for the drops in the first quarter. The Chinese government welcomed infrastructure projects to deal with the economic downturn caused by the pandemic. So, the Chinese cement industry is expected to recover quickly from the pandemic\u2019s impact. Demand for cement is expected to be more inflated in the next three years.<\/span><\/p>\n

On the other hand, India\u2019s cement industry was not so fortunate. The demand for cement dropped more than 15% in 2020, while some UAE producers are anticipating demand to halve in 2020. The developing countries mostly suffered more than economically strong countries as they do not have the capacity or access lines of credit to invest in their infrastructure projects.<\/span><\/p>\n

Source:<\/span> Cement Americas<\/span><\/span><\/a><\/em><\/p>\n

Impact on the Cement Industry During COVID-19<\/b> in Bangladesh<\/b><\/span><\/h2>\n

Bangladesh’s cement industry<\/a><\/span> experienced a devastating blow after the emergence of a global pandemic caused by COVID-19. Lockdown protocols were imposed worldwide, and the economy suffered terribly both locally and globally. The pandemic created grave repercussions in every manufacturing sector in Bangladesh, and the cement industry was no exception to that. A complete lockdown protocol was applied for 52 days from March 26 till May 16, 2020. The <\/span>impact on the cement industry during COVID-19<\/span> was severe, and it halted all sorts of ongoing construction projects in Bangladesh as cement is a key construction material. Social distancing or maintaining a safe distance from other people is a must to ensure the safety of everyone. Therefore, all manufacturing plants in the cement industry were shut down to maintain the safety of workers.<\/span><\/p>\n

The cement consumption rate diminished overnight as mega projects like the Padma Bridge, Rooppur Nuclear Plant, Matarbari Power Plant, Karnaphuli River Tunnel, and Dhaka Metro Rail came to a standstill, including the real estate sector. Individual purchases of cement due to local construction were also completely shut off as all businesses were to remain closed during the lockdown period. Unlike the Garments sector, the cement industry is mainly based on local sales. So, the industry suffered a significant loss without local demand for cement.<\/span><\/p>\n

Source:<\/span> Cemnet<\/span><\/a><\/em><\/p>\n

After lockdown protocols were implemented, demand for cement drastically reduced. At the start of April 2020, there was a reduction in cement production of around 60%-65%. Sales plummeted from 25 lakh bags daily to only 5 lakh bags. Dhaka has the highest consumption rate of cement in Bangladesh<\/span><\/a><\/span>, but it was most severely affected by the pandemic. Some sales were ongoing on minimal scales outside Dhaka.<\/span><\/p>\n

Even though Bangladesh can meet local demands and can export cement, the industry is entirely import-based for the supply of raw materials. So, banking and port operations play crucial roles in collecting supplies. The country-wide lockdown protocols affected the import logistics as banking hours were limited. The transactional capacity of importers was eroded drastically, and they could not open new Letters of Credit or debentures for importing essential raw materials from foreign countries. Limited banking hours, inadequate resources in Customs and Port Operation, and excessive delays in local logistics made the task of importing raw materials very discouraging overall. Thus, a long queue of vessels in Chittagong port has been the norm during the 2nd half of 2020. The sector experienced a degrowth of about 14% in the first half of 2020.<\/span><\/p>\n

The fall in growth rate was entirely due to the <\/span>impact on the cement industry during COVID-19,<\/span> which are:<\/span><\/p>\n