Thailand’s cement sector
Domestic cement sales volume has dropped gradually since 1Q05 while YoY growth rate encroached on negative territory in 4Q05. With the gloomy economic outlook, any improvement in YoY growth is not foreseen in cement sales in 2H06 (says KGI Securities). On the cost side, the recent rise in Ft charge to Bt0.85 per unit from Bt0.76 per unit puts pressure on margin. Although spot coal price is expected to stabilize, producers have locked into purchasing contracts and will still suffer from high coal prices. Despite the cost pressure, an increase in the selling price of cement is less likely due to lower demand which in turn switches bargaining power from cement producers to buyers. EBITDA margin of both Siam Cement (SCC) and Siam City Cement (SCCC) is expected to contract in 2Q06. Published under Cement News
