Slow growth in Thailand

Slow growth in Thailand
Published: 01 January 2007

The Thai cement industry expects growth of only 1 or 2 per cent next year following delays to the new mega-projects, along with signs of only slight growth in new residential projects.

Siam Cement Group’s cement operation is market leader in the industry with a share of up to 50 per cent. Pramote Techasupatkul, president, said demand for cement next year would be much the same as this year because the new construction projects would not start.

The government’s bidding process will not begin until March, and the approval process will take three to four months after the bidding is complete. That means construction will not start until near the last quarter of the year, too late to drive construction firms’ income, he commented.

Meanwhile, demand for construction of residential projects, both detached housing and condominiums, also shows signs of limited growth. As a result, the company believes that demand for cement will continue at between 28,000 and 29,500 tonnes a year, or up only 1 to 2 per cent from this year, he said.

Cement consumption in the domestic market was 28,966Mt in 2005 and is expected to be 28,974Mt in 2006.

Chantana Sukumanont, executive vice president for customer relations of Siam City Cement Plc, which ranks second in the cement industry with a share of 28 per cent, added that the company estimated cement demand at 29,481Mt next year, up only 1.7 per cent from this year, because new construction projects would be delayed.

"We estimate domestic market growth for cement at 1.7 per cent next year because we believe that demand to rebuild residential areas which were flooded will encourage sales, but it is a limited demand when compared with the mega-projects which have been delayed," she said.

Following the market trend, Chantana said the company had to focus on premium products to boost value rather than standard products, and that would be a way to maintain sales next year.