Bangladesh cement industry update and regional SCM trade: Ikram Ahmed Khan, Shun Shing Group

To be honest with you, I've been into trading conferences for more than 25 years, and then this is my first time into Cemtech, and thanks for you to invite me. And, to be honest with you, I was thinking that we always fly a plane, we ride a car, we move into a cruise liner, but we never think of the engine room. So when I met you and many of the colleagues of you, I understand that you are behind the success of all the enterprises we see. So I congratulate you, and I would definitely love to meet all of you in the industry, specifically the plants, and I would love to know how it works. Obviously, we do have a plant, and I know how this help us to grow. So thanks again.

And I'm not a technical guy, so I'll proceed with something what we would like to talk. But before that, I would like to introduce my company very quickly. As Thomas said, that we are 38 years old into this industry. Specifically, we are focusing on cement. We are industrial trading and shipping business. We do also focus on to now green business. So we have invested into a grinding station in Bangladesh, only doing the slag grinding. Our grinding capacity is 9.4 million in Bangladesh and in Dubai. And we do global trading. We are the biggest global traders in Asia. We do over 19 million tons. And then in the local trading, we do six million tons in Bangladesh, UAE, and Qatar.

We do have a toll grinding contract in Qatar. And we are the biggest slag traders in Asia. We do over seven million tons of GBF straight and GGBS. And because of the other subsidiaries, like power plants, bag plants, the shippings, we do have over 5,000 employee, and we do have offices in 14 cities. Now, let's focus on to the Bangladesh, because Bangladesh actually is the world most important market for whoever wants to export because this is the biggest raw material importer, because Bangladesh doesn't have any limestone reserve. It's a delta. So we see that the continuous growth is there because it's a small country, and the population is nearly 180 million.

So at this time, its effective productions capacity is about 86 million tons, but the demand is about 40 million tons. However, I need to clarify that the seasonal market is there because of the floods and the rains. During the low seasons, let's say it's start from June to September, the demand goes down, but the high seasons, the demand goes almost two and a half to three times. So that's why those groups has a bigger capacity. They can have that kind of benefit out of the growth demands during the high season. Let's look at the industry structure. The Bangladesh map is there. Capital is Dhaka. Maybe many of you have visited Bangladesh. There are two basic plants also.

From the Meghalaya, India, there is a Lafarge plant. They get the limestone by conveyor. And with that one, there's a small plant, but because of the logistics, they cannot grow the capacity. It's about 12-kilometer conveyor, and there are geopolitical issues and the locals issues, plus the transportation to the main capital cities where about 60% of demand, so they suspended any expansions. And the other one is government one, very small, better not to mentions. And as I said that Bangladesh is the world number one importer of clinker and 20 million tons and rest 20 million slag, fly ash, gypsum, limestone also they import.

And then the market was OPC, and then during the '97 financial crisis, the Europeans came into this market, and at that time they introduced-- Of course, they took over many plants because of the currency collapse, but they also introduced the blended cement. At that time, we understand the benefit of use of fly ash and slag. So most of these industries was with OPC, but then they moved into the fly ash pozzolan cement as well as slag cement. So 95% market as in today by this time is the Portland cement. When we talk about BDS, because Bangladesh is standard, they also kept, but they added EN standard, and this is the blended cement where they allow you to add 35% of any additives and 65%.

And OPC is still there, where there are some projects they ask OPC, they can use the OPC, only 5% market share. So the type of cement produced in Bangladesh shifted towards, as I said, the blended cement, is that they have the PPC, pozzolan cement, as well as slag cement has come. Because now many of the Bangladesh also, there are many coastal projects are coming. Around $40 billion of projects are running into Bangladesh. So that's why many of these companies started producing slag cement. Just a snapshot of the capacity import and market dynamics. As I said, the capacity is around 86 million. Demand is around 40 million. Surplus is around 46 million.

But I gave the explanation, fair opinion, that the industry need this kind of capacity for country like Bangladesh, where there are a lot of breakdowns, there is a power shortage, then this capacity is not a burden for the bigger groups like us. We think that this is an investment for future. Also, there are many industry was ball mill based, but then last 10 years, most of these big groups will have to reinvest into VRMs so that the ball mills are idle. So the capacity is shown as included ball mills. But the VRM is needed for the slag. Bangladesh is the biggest world, actually, single country imports the slag as a single importer.

However, as the conglomerates thinks that they should go into more capacity buildups, even though there is capacity, there are new capacities are coming, like one of the big group has recently completed their two 400 TPH Lusher plants with a seven million capacity. But their confidence cement is coming with the two million tons and 1.8 million and one among the base, Dubai, Bangladesh, has just started production of two million tons. So these are something quite challenging for any international player. So that's why before there are many international players who were in Bangladesh, but many of them exited, like Cemex had left. Now only Holcim and Heidelberg is there.

And the raw materials, as I said, that they are importing everything. If you look at the summary, they imported in 2025, 20 million tons clinker, 1.4 gypsum, slag 7.7 million tons, limestone about six million, fly ash about 4.5. It's the total of the... Because there is nothing available in Bangladesh. So that's why when I was talking to Ms. Grace, she said she was surprised that when I'm talking about $80 a ton, why it is still not okay. Actually, Bangladesh has a high tax, and because of the freight, the CFR cost is very high. Like we are selling $55 clinker delivered to Bangladesh.

So the profit margin is very low, but it is something like in cement business, all of you know that this business, once you start this business, you cannot do any other business. That's the problem. When you're in this industry, you cannot switch to other industry. So that's why many of these cement companies continue to invest and grow. And as our group's trading company called Semco, we in Bangladesh because of our main markets, we are healthy market share in Bangladesh. These are very simple snapshots. As I said, about $40 billion of infrastructure projects are going on, like MRT, and then these are financed by JICA and then governments.

There are a lot of raw materials that are being imported. Even today, we don't have any aggregates, so we also import nearly 15 million tons of aggregate. And during this war, we are importing from China now, where even a steel-grade limestone or a normal cement-grade limestone also being imported from China now. Then there's a deep seaport. Bangladesh doesn't have any deep seaport. Normal, there are only one seaport that is also draft is only 10.5 meters, so they now are putting up a very big deep seaport with around $5 billion of investment, which is coming. Then there are some rail expansion, express railway, flyovers.

Everybody say if you go to Bangladesh, it is a bumper-to-bumper economy. So, and a lot of populations, they do work in many countries globally, and then they send, like Philippines, they send $50 billion to their economy. Bangladesh also send around $30 billion. So it's a micro level demand is there. There's a lot of elevated expressway and now MRT also coming. Then there's a nuclear power plant is just completed and commissions. It is around 2.4 gigawatts. First nuclear power plant in Bangladesh. It is around $12.65 billion funded by Russians. And that's one of the biggest demand was the CEM III A for the slag cement.

And then you can see a small pictures how one of the world most densely populated country is Bangladesh. But the urbanisation is still growing, and also the security is an issue. So even the peoples are interested to protect their assets or their livelihoods by investing into concrete roof and wall. So we see that a lot of demands has come. And then you can see that the statistics saying that 65% of Bangladeshi will live in cities by 2040, driving housing demands. It's not that just government demand, so it's fueled by government and private demand as rapidly increasing the demands.

Now, other than Bangladesh, we also discuss with Cemtech that now people are talking about the green cement and others, as I said, that we invested in Dubai. We introduced slag in many countries, even in Vietnam, we introduced. So the SCM is very important for the many countries in Asia. There are two reason. One is the production cost reductions, economics, because as I said, the clinker, say, Bangladesh delivered is $55, whereas the slag is only $20. So you can imagine that how the industry owners are interested to introduce the slag or fly ash prices also around $20, $25. So these are the major sources now, Japan, China, Vietnam, Indonesia, Korea, and India, for slag as well as fly ash.

So if we look at the overview, it goes by the steel productions. You may have the numbers like any per ton basis, any crude steel productions, around 25% to 30% is the waste, which was waste, but today it is a commodity, blast furnace slag, and it's only from the blast furnace. We cannot use any steel slags from arc furnace or ladle furnace. So Japan is consistently exporting around 10 million tons a year, and that's maintained their one of the most highest quality slags because they use the best quality. I don't know. It depends on the what quality, I don't know, you are using or whether you are using any other.

So in the Japan, they are exporting, focus on to give you back down, Asian markets, they're exporting 4.3. In Americas, South and North America, they're exporting around 2.8 million. Europe has come because of the carbon tax, CBAM is coming. They're focusing on lot of, we are also exporting to Europe now. We export many countries now. In Africa also started now. And as I said, that Africa, there are two sort of people. Some people are coming for the economics, their costings, like Africa, Bangladesh, Sri Lanka, Philippines, they are looking at this. There's no carbon tax. But Europe has to focus on because of carbon tax, they are taking this slag.

But in future, they have to take the slag cement CEM III A and CEM III two because if they import clinker, then there's a tax on clinker, but they import the slag, there's no tax. So now they are asking us to supply them the CEM III. So these are the future of the SCM trade, that only as a raw material, slag or fly ash cannot go in future. It has to be a finished goods. So China was not there, but then China entered into the slag export in a big way last three years. So they have that 960 million tons of crude steel productions. Out of that, they export around, locally, they do also 10 million tons, and they export around 20 million tons of slag in 2025.

But the target of this 2026 may be reaching around 30 million tons because the demand has grown. But we see that in the January, February, in just two months, they exported five million tons. China also exporting targeting the Asian market, Middle East market, Africa, Europe, Americas, and Oceania. And then because of we are the first generation in slag in Asia, we maintain very good relations with all the steel plants in China as well as in Japan. We have long contracts. You can see that our trading department is export market share is around 28% of China and Japan also. Vietnam actually has a two role now. One of them, because of the tax on the Chinese slags to USA.

So Vietnam import and produce GGBS and export to USA. So there are some import as well as they have export also. So there are Hoapa Steel, then there's the Formosa Steel. So they export, but very small quantity. Like they have reduced to 1.3 because locally, because of the cement is very competitive overcapacity, many companies, they start using slag now. So Vietnam, as I said, that they're very small quantity. They're exporting Asia, Europe, and other markets. But you can see that out of their the volume, they exported to Americas 100,000 tons. Indonesia also doesn't have the local demands of slag, so they export GGBS, and then their export volume is about three million tons.

Indonesia is exporting to Europe because the quality has been accepted by many European countries. Dexin is exporting, and they agreed to sign five to seven years long contract with a fixed price, which the Europeans likes. So that's why they got a lot of customers, and they are very happy with the Dexin quality on the slags. South Korea also, on and off, they buy from Japan, but they also export small volume, and they have local demands. The total volume of 12 million tons, technically they use the export to some to Vietnam, some to Taiwan. So we see that the export is only 1.4 million tons.

They exported to Taiwan mainly, one million tons, Vietnam around 400,000, and Malaysia around 25,000 tons. India was a net exporter, but you may know the JSW Cement, they become the world's number one in green cement production, so slag cement. They use all their slag to produce their slag. That's why only now remain is the Tata Steel. We are also their exclusive exporter. Otherwise, the AMNS or the Jindal or the JSW, ORNL, all the steel mills are now going into redder. India becoming an importer of slag. We are exporting slag to India because many of the big group, even UltraTech, doesn't have any steel mill investment, so they are also behind the race with the green ward.

So they started import in the East Coast and producing green cement. So you can see that they have to remit a lot of new blast furnaces coming. That's a good news because there are a lot of hype about the use of SCM, but there is a threat also that what will happen if the slag is not there. So that's why it's good news that many of the talk about the hydrogen used in the steel mills and others is gone. Maybe Mr. Trump has asked them not to talk about the carbon, focus on the money. So many of the steel mills has delayed those kind of plan to shut down the blast furnaces.

Rather in India, a lot of new blast furnace capacity is coming because they are the world's fastest-growing markets into urbanizations. So India mainly export to Asia, and then you can see that as a CEMCO, we are taking around 65% of that market. So as a summary, if we look at this, Asians trading is going on from China is around 20 million tons. Japan is 10.7, South Korea 1.5, Indonesia 1.3, India 1.5. The other is at about 35 million tons export. And this has keep growing as long as what Ms. Grace said, that if the Chinese economy grow, then it's a big issue that there may be the price will be sharply because Chinese slag FOB was $26 to $28, today is $4.

So you can see that the risk of this kind of SCM is very high because they are not dependent on the export. Today just they are exporting because they don't have the local demand. If the local demand come back, they will not export. So we are also continuously finding alternative sources for other ways, like we are now using some ladle furnace. We are trying to use ladle furnace to add into the cement. So it's a quick summary. As I said, the Bangladesh is always the number one, 7.3 million tons import, then the Taiwan 4.5. UAE came back as a fast growth, 6.1, Malaysia one, and Vietnam one. So evolution scheme is because of the optimization, sustainability, clinker reduction in Bangladesh.

That's why the slag and fly ash import has continuously increasing. You can see that compared to 2024, 2025, slag use has increased 7.3, and then the fly ash has gone down because of the VRM investment. A lot of vertical roll mill is finding that this is better than because in fly ash you can reduce more than 35%, but in slag you can go up to 80%. So it's a big impact onto the bottom lines for any cement producers or grinding stations. Then come to the fly ash. Again, Bangladesh, among all these Asian markets, Bangladesh is the biggest fly ash importer. We are the exclusive fly ash. We have the offtake contract of more than five years with the Kolkata-based CSC, the oldest power plant.

So it's all goes by the bay crossing barges. We send, and they have the conveyor up to few kilometers from the power plant and they load by gravity. So that's also one of the important survivals for Bangladesh. But now we see that Sri Lanka started importing fly ash. We are actually exporting Chinese fly ash to Philippines. So we are actively promoting fly ash to alternate to slag because we see that by probably 2035, slag will be shortage. So that's why many of this, like we are working on Vedanta, one of the biggest player in India to get this fly ash and pozzolan also there.

So we wanted to quickly summarize that how the fly ash is India about five million tons, China half million now, but they're ready to export. Vietnam is half million, but they can do because Vietnam is importing 20 million tons of coal now. So there's a lot of fly ash is generating. They are ready, and Japan also there, but because of their port is not efficient, they cannot export. And that's why they export a lot of like Taiheyo export a big volume of pozzolan cement to many markets, including their terminals in Singapore. So these are what I say that fly ash is many ways to export. What we are also exploring is called conditioned fly ash.

So you add the water into the fly ash, bring it to the port without any environmental impact, then load into the big vessels, transfer to any markets, Africa or US, then use a dryer to dry it and feed into the mill. So this is also we are working on it, and we have done shipments. But other than this jumbo bag is there and then the barge shipments are there for the terminal operations. Then we are also working on pozzolan. We have offtake contract with one of the biggest pozzolan mine in Aceh, and we started export from there to Bangladesh, Sri Lanka, and looking at the other markets where we can compete with the fly ash as well as with the...

Because pozzolan is 100% carbon free because it's natural. But in fly ash, you still have carbon because when you have a seaband, there will be a cost even into the what type of ship you are using, what sort of fuel you're using. So to looking at that down the line 10 years, we are also heavily looking at pozzolan now in the Greece as well as into Indonesia as well as in the Saudi Arab. In direct Syria, there a lot of pozzolan deposits are there. So that's all. I think that this is not related to, as I said, that I'm not a technical person, but I want to learn.

So maybe I continue to come and see you and become friends of you because our group is keep growing and have interest into invest into terminals, basic plans. So sky is the limit to cement business. Thank you.