CCAA reveals why there has been a recurrent shortage of cement in the country

Recently there has been a recurring scarcity of cement, which has caused development delays and increased expenses for Bhutan’s construction industry. The cement shortage between June and September 2023 has alarmed the public, and sparked conversations about possible reasons and solutions.

According to a report published by the Competition and Consumers Affairs Authority (CCAA), Bhutan’s building industry experienced a sharp increase in activity after the pandemic-induced pause, which made the shortage of cement worse. Due to occasional maintenance shutdowns and technical difficulties, the nation’s three largest cement producers—Dungsam Cement Corporation Ltd. (DCCL), Penden Cement Authority Ltd. (PCAL), and Lhaki Cement—were unable to fulfill the rising demand. The manufacturing of important cement kinds, such as Portland slag cement (PSC), Portland pozzolana cement (PPC), and ordinary Portland cement (OPC-43), was impacted by the scarcity.

In 2023, the aggregate production of the three primary cement plants in the first two quarters amounted to 242,245.16 MT, indicating a rise in comparison to the corresponding period of the preceding year. Additionally, the statistics revealed that each company’s production trends were different. Production at PCAL increased in January, then fell off in the months that followed. There was a brief increase in June, but the fall continued in the months that followed. Conversely, DCCL’s production peaked in May and then sharply decreased in July. Lhaki Cement also saw its ups and downs, with its peak months being February and May and its lowest months being July and August.

From January to June, the monthly output patterns showed a continuous rise in cement production. Still, there was a sharp downturn in the following months. The three main cement factories showed variations in output, according to production statistics from 2022 and 2023.

Regular industrial maintenance shutdowns presented a problem, generating supply chain interruptions. Cement factories made an imperfect, but valiant effort to combat these issues by keeping strategic stocks, which were some of the causes of the shortage of cement in the country.

Similarly, because of aged plants and technological problems, supply interruptions external pressure on the industry is increased by uncertain supply and unanticipated price increases for essential raw materials. In addition, Bhutanese cement factories continue to have connections with Indian markets in order to hold onto their established supply position. These elements add to the complexity of the country’s supply chain and cement manufacturing.

Experts and researchers underlined the vital significance of a steady supply of cement for the building industry and the economy through the CCAA Industry report. To tackle the issue of scarcity, multiple suggestions were put forth. Cement manufacturers were urged to communicate their maintenance schedules in advance to allow construction projects to plan their needs, minimising disruptions.

Cement manufacturers were advised to maintain or expand their stockpiles before scheduled maintenance shutdowns. These reserves could serve as buffers during shortages, stabilizing the supply chain.

In situations where shortages persist, the government may think about providing import subsidies to offset the cost differential between imported and domestically manufactured cement because of the 15 percent import tax, therefore guaranteeing a steady supply.

Cement scarcity brought attention to the industry’s need for proactive measures and strategic cooperation between cement producers and the government.

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