Thai cement demand is expected to increase by six per cent in 2015 after remaining flat last year, and prices are expected to hold relatively steady despite new capacity on the way, the country’s leading cement producer has said.
Speaking during the SCG Dinner 2015 hosted last week, CEO Kan Trakulhoon pointed out that demand resumed YoY growth in December and this year demand will be driven by state infrastructure and commercial projects, Bualuang Securities reported. After reaching a record level of 30.08Mt in 2013, Thai cement demand remained flat last year as political turmoil caused a delays in infrastructure projects.
Despite new Thai cement capacity due to come on-stream, SCG is not very concerned about the downside price risk. Fellow domestic cement producer is TPI Polene currently expanding capacity its Saraburi works with the installation of a 10,000tpd line. The new project is due for completion this year but SCG only expects a slight and short-term decline in cement prices. The new supply should be fully absorbed by demand growth in 2015-16, SCG added.
Management also noted that EBIT margin may come under pressure from depreciation expenses for new cement plants in Cambodia (2Q15) and Indonesia (3Q15), but the impact will be only short-term, as the firm expects to ramp up to full utilisation within only 6-7 months of start-up dates, the Bualuang Securities report, as published in The Nation, highlighted.