Siam Cement needs projects

Siam Cement needs projects
Published: 06 January 2004

Siam Cement, Thailand's largest cement producer and distributor, has urged the government to speed up work on infrastructure projects planned for this year so that the cement industry can enjoy sustainable long-term growth.  Pramote Techasupatkul, president of Siam Cement Industry Co, a flagship of SCC, said the construction of infrastructure projects would benefit the industry in the long run because they will require huge quantities of cement.  For housing projects, the volume of cement used for each unit represents 3-5 per cent of total construction costs. Suvarnabhumi International Airport, which will require around one million tonnes of cement for its construction, is the only current large-scale infrastructure project.  Other projects, including those related to mass transit and road construction to ease traffic congestion, have been approved by the government and work will likely begin this year. But progress appears to be slow and doubts have been raised as to whether the projects will proceed on schedule.

The cement industry has picked up in line with the recovery in the property market last year. But even with the boom, production in 2003 stood at only 23-34Mt, compared to annual production capacity of 53Mt.  "There is at least 50 million tonnes of actual production capacity that we can utilise right now.  Should the cement industry enjoy annual growth of 5 percent for five years in a row, he said demand for the product would rise to 40 million tonnes a year.

This production level is considered satisfactory as it is higher than the approximately 37 million tonnes a year produced prior to the economic crisis in 1997. Demand at that time came mainly from the construction of housing projects by the private sector. Mr Pramote forecast that demand for cement would rise around 5-10 per cent next year, boosted by continued growth in the property business and improvements in both the domestic and global economy.  He said the government would need to come up with new measures to stimulate the economy in order to meet the premier's projection of 8 per cent economic growth next year.

Local sales of cement by SCC are expected to rise to 10Mt this year from 9Mt last year while exports are likely to drop to 5Mt from 6.2Mt. However, profits are set to increase since there is a higher profit margin on local sales compared to exports.