Siam Cement sees 2009 demand falling 5-10 per cent

Siam Cement sees 2009 demand falling 5-10 per cent
22 July 2009

Thailand’s Siam Cement PCL expects domestic cement demand to fall 5-10 per cent in 2009 but is banking on a recovery in 2010 on the back of government spending on infrastructure.

Siam Cement predicted domestic consumption of 23Mt this year, with its own cement sales falling in line with the industry, cement division president Pramote Techasupatkul said.

"For the full year, we expect cement demand to fall by 5-10 per cent. The decline is close to the range of last year. It’s not a big worry," he told Reuters in an interview.

Domestic cement consumption has weakened over the past three years because of the slowdown in the economy and prolonged political turmoil.

However, the government’s THB1.43trn (US$42bn), three-year economic stimulus package is expected to increase demand for cement in both public and private construction projects later this year.

Domestic cement consumption growth is usually about 1.5 times GDP growth. Thailand’s economy is expected to contract 2.5-3.5 per cent this year after 2.6 per cent growth in 2008, according to the Finance Ministry. A recovery is expected next year.

Pramote said the company’s cement exports could fall by 10 per cent to around 7.6Mt this year because of the global economic crisis. Its main overseas markets are in South and Southeast Asia.

Last year, it shipped about 8Mt.

A THB5.8bn investment in developing waste-heat power generation at five domestic cement plants and a plant in Cambodia was due for completion in the fourth quarter, which would cut energy costs by an annual 25 per cent, Pramote said.

The company would invest another THB0.5-1bn on improving energy efficiency at its cement plants over the next four or five years, he said.

Last year, cement earnings increased 10 per cent, helped by lower energy costs, whereas the company made losses in its petrochemical and paper divisions, hurt by the global recession.

Siam Cement will spend THB100m this year on increasing capacity at the Cambodian plant, Pramote said.

It was also looking at building another cement plant in Cambodia and was looking to buy cement firms in Southeast Asia, including Vietnam and Indonesia, he added.
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