Iftekhar Rahman
Verdant Global
Bangladesh’s cement industry is facing more than a cyclical cost shock. The current pressure exposes a wider industrial policy challenge: a strategically important construction input remains highly dependent on imported raw materials, vulnerable to external supply disruption, and constrained by weak domestic demand. Cement is not only a private construction commodity; it is directly linked to housing, infrastructure execution, employment, logistics, banking exposure and public investment delivery. Stress in this sector therefore carries consequences beyond manufacturers’ margins.
The immediate pressure has come from geopolitical disruption affecting Middle East supply routes. Recent industry reporting indicates that cement manufacturers have been forced to source clinker from China, Vietnam and Thailand at higher prices instead of comparatively cheaper Gulf markets. Bangladesh imports nearly 90% of its clinker, leaving producers exposed to price volatility, freight escalation, insurance costs and longer shipping routes.¹ Separate reporting has also noted that conflict-related disruption around shipping routes has increased transport, insurance and supply-chain risks for manufacturers.²
Yet the policy challenge is not confined to supply-side inflation. Under normal market conditions, producers could pass part of the cost increase to consumers. Bangladesh’s cement market currently has limited capacity to absorb such increases because private construction, real estate activity and public infrastructure execution remain subdued. The Daily Star reported that cement sales weakened significantly in 2024 due to political instability, macroeconomic pressure and delayed government infrastructure projects, leaving the industry operating at less than half of its capacity.³ This creates a difficult combination: higher input costs, weak pricing power, low capacity utilisation and pressure on working capital.
This margin compression matters for policy. If manufacturers continue absorbing imported cost shocks without demand recovery, weaker firms may reduce production, defer maintenance, delay payments to suppliers or accumulate banking stress. Larger firms may survive, but industry concentration could increase, reducing competition over time. At the same time, low utilisation should not be interpreted mechanically as structural overcapacity. Industry representatives have argued that installed capacity reflects seasonal construction demand, maintenance requirements, power and gas constraints, limited cement storage life, and long-term demand expectations from infrastructure development and urbanisation. Recent reporting also notes that Bangladesh exports very little cement, with shipments to the United States almost non-existent and limited exports mainly directed to neighbouring regions of India.⁴
The first response should be targeted and time-bound. The government may consider temporary relief on clinker and slag-related duties, advance income tax and port-handling charges, linked to continued supply discipline and reasonable retail price behaviour. Such support should not be treated as a permanent subsidy, but as a stabilisation measure for a strategically important industry facing an imported cost shock. Faster customs clearance and reduced port delays would also help limit demurrage, logistics costs and liquidity strain.
The second priority is supply-chain resilience. Bangladesh should not assume that imported clinker will always remain cheap, reliable or geopolitically neutral. FICCI has noted that the cement sector is heavily dependent on imported raw materials and exposed to port, freight, customs and logistics vulnerabilities.⁵ A national feasibility review is therefore needed to assess domestic limestone extraction, partial clinker production, alternative blending materials and diversified regional sourcing. This review should include environmental safeguards, transport economics, private-sector investment incentives and port-capacity requirements.
The third response must focus on demand stability. Cement is closely linked to infrastructure execution, housing confidence and private investment. A credible, disbursement-focused public infrastructure pipeline would help stabilise capacity utilisation, employment and industry expectations. Public projects should prioritise execution quality and payment discipline, because delayed disbursement weakens the entire construction value chain.
Bangladesh should therefore treat the cement-sector challenge as an industrial resilience issue, not merely a price or overcapacity issue. The current shock has exposed the strategic cost of excessive import dependence. A stronger policy framework should combine temporary relief, logistics efficiency, diversified sourcing, disciplined infrastructure execution and long-term domestic value addition.
References:
1. The Daily Star (2026) ‘Cement makers under strain as war drives up input costs’, The Daily Star, 30 April. Available at: https://www.thedailystar.net/business/economy/news/cement-makers-under-strain-war-drives-input-costs-4163166
2. The Daily Sun (2026) ‘Cement industry under pressure as war pushes up import costs’, The Daily Sun, 29 April. Available at: https://www.daily-sun.com/business/871768/cement-industry-under-pressure-as-war-pushes-up-import-costs
3. The Daily Star (2025) ‘Cement sector struggles amid political, economic challenges’, The Daily Star, 20 January. Available at: https://www.thedailystar.net/business/news/cement-sector-struggles-amid-political-economic-challenges-3804466
4. The Daily Star (2026) ‘Bangladesh’s cement producers reject US “overcapacity” claims’, The Daily Star, 17 March. Available at: https://www.thedailystar.net/business/economy/news/bangladeshs-cement-producers-reject-us-overcapacity-claims-4130441
5. Foreign Investors’ Chamber of Commerce and Industry — FICCI (2025) ‘Bangladesh Cement Industry: Import Dependency, Port Infrastructure and Trade Dynamics’, FICCI, 23 April. Available at: https://www.ficci.org.bd/ficci-stories/bangladesh-cement-industry-import-dependency-port-infrastructure-and-trade-dynamics
