The Bangkok Post reported that Siam City Cement will become the first local producer to raise its prices as domestic consumption has been better than expected, thanks to growth in infrastructure and property development. Mr Philippe Arto MD of SCCC said that the price increase by THB 200/t mainly reflected more costly coal, for which 2011 prices are being quoted at 15% higher than this year’s level. Before the increase, SCCC’s Insee cement products were priced from THB1900 to THB2020/t.
He said that local cement prices have stayed relatively unchanged over the past 10 years even though prices of coal, electricity and wages, which together account for nearly 90% of production costs, have risen. Statistics show that cement prices in Thailand are among the lowest in 80 countries surveyed, given the excess capacity and severe competition. Cement producers including SCCC have to export some output at lower margins than on domestic sales.
Mr Arto said that but in 2010, cement demand in Thailand has exceeded projections, growing in a range of 7% to 8% from last year to return to the 2008 level of 26Mt against the original forecast of a 3% rise over 2009. Two major drivers of demand have been government spending on infrastructure projects under the Thai Khem Khaeng economic stimulus scheme and improving private investment in property projects, especially condominiums and houses.
Mr Arto said that SCCC, which is one third owned by Holcim, has a 27% to 28% share of the cement market, behind Siam Cement Group. He added that: "We want to maintain our market share so we have to grow in line with the overall market.
" The strong appreciation of the Thai baht, meanwhile, has had only a small negative impact on SCCC’s financial results as it benefits from a natural hedge against currency exposure. The company imports coal in US dollars and quotes dollar prices for its exports of clinker. Kim Eng Securities projects domestic cement demand will rise 10% to 26.5Mt this year and another 10% to 2Mt in 2011. SCCC in the first half earned a net profit of THB1.54bn, up marginally from THB1.5bn in the same period of 2009.