Thai export curb mooted

Thai export curb mooted
Published: 06 April 2004

All eight local cement manufacturers have been asked to review and even consider cutting back exports after Prime Minister Thaksin Shinawatra raised concerns about the industry’s impact on the environment.  The prime minister said on his radio programme on Saturday that he was concerned about pollution in Tambon Na Pralarn, Sara Buri, caused by dust from rock blasting at nearby cement production facilities.  Mr Thaksin said the Commerce Ministry should control cement exports as priority should be given to domestic use.

"The government granted concessions for limestone mountains, which are the country’s natural resource, to cement producers with low concession fees so that they could produce cement sufficient to accommodate the local market," the premier said. "As a result, surplus production and exports at prices lower than that those set locally are not appropriate."  Commerce Minister Watana Muangsook said the ministry would meet with cement industry executives on Thursday to discuss whether exports should be curbed.

The eight producers are Siam Cement Plc, Siam City Cement Plc, TPI Polene Plc, Asia Cement, Jalaprathan Cement Plc, Cemex Thailand, Samukkee Cement and Thai Sathapana Co.  Siripol Yodmuangcharoen, director-general of the ministry’s Internal Trade Department, said the meeting would cover the issues of production costs, changes in production capacity over the past three years, and domestic and overseas selling prices.  "What the ministry has to find out is whether the production costs of the cement producers would be economical if they cut production output to supply only the local market," he said.

Cement producers disagree with the prime minister’s suggestion.  Prachai Leophairatana, TPI Polene’s chief executive, said producers had already reduced their exports since export prices had become less attractive than domestic prices.  He said, however, that local manufacturers still needed the exports to maximise capacity utilisation to meet economies of scale.  "We have to export to reduce our production costs. Once domestic demand increases and makes our production meet economies of scale, we can stop exports," he said.  According to Mr Prachai, Thailand’s cement exports last year totalled 12Mt, down from 20Mt in 1998.

Another industry executive said the export price could not be equal to the local price since it was based on demand and supply. "The cement prices quoted in overseas markets must be competitive with those of our competitors," he said.  Currently, cement prices in the international market are US$26-32 per tonne, 30 per cent below local prices.  Local cement consumption is expected to be around 26Mt this year while exports are forecast at 11Mt.  The executive said the doubling of vessel freight rates had already spurred manufacturers to reduce export shipments, given that transport costs are a major factor in exports.

An industry source said Siam Cement, the country’s the largest producer, was forecast to export six million tonnes of cement this year. Siam City Cement’s exports are forecast at four million tonnes and those of TPI Polene at 600,000 tonnes, a drop from one million exported last year - edited report: Bangkok Post.