Southeast Asian advances
Southeast Asia continues to be a hive of cement activity and recent commentary by local producers suggests the prospects remain promising for certain key markets through 2014.
Philippines: new capacity on the way
The outlook for the Philippines remains upbeat for 2014, driven by government infrastructure spending and private sector projects. Last year cement sales rose by 5.9 per cent to 18.4Mt, according to local association CeMAP. A rise in construction activity and an increase in the Department of Public Works and Highways’ budget for infrastructure and housing programmes, as well as major rebuilding projects in the aftermath of Typhoon Haiyan, suggest growth will be maintained this year.
Market leader Holcim reported a particularly strong performance for the most part of last year with volumes substantially ahead until the November damage which brought activities to a near-halt for the remainder of the year. The company has recently shelved the construction of a new plant in Bulacan as its Swiss parent reorganises operations ahead of the ASEAN economic economic integration in 2015. It has, however, upgraded capacity of its La Union and Misamis Oriental plants, as well as reactivated its idle grinding facility in Batangas.
Cemex said this week it remains optimistic on the domestic market outlook stating that it “expects the growth to continue this year”. In anticipation of increased demand needs the company is investing US$80m to upgrade its Naga plant by 1.5Mta and expand its terminals and distribution stations. This is expected to add around 40 per cent to the company’s total production capacity.
Meanwhile, Lafarge is implementing two new mills, one at its Bulacan facility and the other at its Rizal works, both due for commissioning in the first half of 2015. Last year, it reopened its Danao plant in Cebu and implemented key debottlenecking projects at Iligan and Norzagaray plants.
Malaysia: further growth ahead
Malaysia is also proving to be another high-performing ASEAN market driven by the continued progress of government-led investments and key infrastructure projects, as well as ongoing residential and commercial developments. CEO of Lafarge Malaysia, Bradley Mulroney, recently expressed his confidence on the long-term outlook of the country, stating: “The market is fairly well-oriented. Malaysia has a young population and we see the demographic need for housing activities, so there’s a lot of growth to go.”
New capacity in the Malaysian market is on the way from the country’s second-largest producer, YTL Cement, which is constructing a 5000tpd plant approximately 260km east of the capital Kuala Lumpur.
The CMS Group also plans to plans to intensify its investment in Sarawak by enhancing its distribution, storage and packing facilities as well as the construction of a 1Mta grinding plant. Earlier this week, the company attributed a 46 per cent rise in 2013 pretax profit to higher earnings from its cement division due to the successful recommissioning of its upgraded clinker plant.
Regional challenges
Challenges persist for producers in Vietnam as the industry continues to be weighed by excess capacity. Promotion of exports is still being viewed as the way forward to alleviate oversupply and boost profits. Last year, total industry sales rose 13.9 per cent to 61Mt, comprising 47Mt and 14Mt of exports. This year a 1.5-3 per cent increase in overall sales is expected to 62-63Mt.??In Thailand solid demand was experienced last year due to infrastructure projects, commercial construction and real-estate development. However, the country's top producers expected consumption to decelerate this year on the back of a slowdown in government infrastructure spending due to political unrest.
Indonesia: new capacity frontrunner
Having enjoyed two blistering years of growth in cement demand, consumption in Indonesia is moderating to more sustainable rates of development. Last year demand rose by 5.5 per cent to 58Mt – the slowest growth since 2010 with demand having increased by 17.7 and 14.5 per cent in 2011 and 2012, respectively. This year the Indonesia Cement Association anticipates a 6-7 per cent advance to 63Mt with around 1Mt of demand expected to be met by imports.
Indonesia still leads the way in terms of its new capacity with new projects continuing to be announced. FLSmidth has recently been awarded two major projects for the PT Semen Indonesia group companies, comprising an 8000tpd greenfield plant at Rembang for Gresik and an 8000tpd line for Padang.
Recently-completed projects include the inauguration of Semen Tonasa Line IV project last month in the presence of Indonesian President Susilo Bambang Yudhoyono. Meanwhile, the Bosowa group launched a 1.8Mta cement mill at its plant in Maros at the end of last year. Semen Indonesia has also been improving its distribution and logistic capabilities and yesterday inaugurated its 23rd packing plant. Buoyed by its new investments, the company is reportedly aiming for an eight per cent increase in sales in 2014, with up to US$429m capex being allocated to help enhance production capacity. It is also looking to step up its regional expansion with investments earmarked for Malaysia and Bangladesh.
