Since the end of December, cement prices have increased by an average of 20 per cent, and even quicker cost increases have not allowed cement makers to maintain their already-squeezed profitability. The peak season for the cement sector was in February-April, but sales fell this year compared to the October-December quarter and the same period last year, according to Md Shahidullah, Vice President of the Bangladesh Cement Manufacturers Association (BCMA).
Both industry experts claimed the slowdown was caused by a sudden increase in building expenses, which pushed many builders to put projects on hold while they waited for construction rod and cement prices to fall. Cement mills did raise prices by about 20 per cent in the January-March quarter, according to Masud Khan, but not enough to offset growing raw material costs. Because the market is excessively competitive, Shahidullah claims the raised prices covered half of the cost rise.
According to an analysis of publicly traded cement mills, the gross profit margin of the companies declined from over 15 per cent a year ago to 8 to 9 per cent in the October-December quarter of 2021. However, the industry was seeing sales growth, which allowed businesses to save money to some extent. Since July last year, the source price of clinker has risen by more than 80 per cent to a near-record high, while freight costs have continued to rise, adding to the cost of raw materials, according to Khan.
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