Thai Cement Monitor

Domestic cement consumption continued to rise by 25 per cent YoY to 2.15Mt in December (+14% MoM). Cement demand for 2003 grew to 24.2Mt, up 5% YoY.  Cement demand grew at a faster pace especially in 4Q03, which was mainly driven by active construction in the residential property market.  Cement demand in 2004 is expected to grow further year on year, supported by ongoing strong construction activity in the residential housing market. An indicator supporting cement demand growth is the total construction area permitted, which increased by 29% YoY to 16.4mn square meters in the first eleven months of 2003.  The upside potential on cement demand is driven by the government’s plan to spend Bt1.5 trillion on infrastructure projects during the next five years. Assuming government spending of Bt100bn per year for these infrastructure projects during the next five years, cement demand would increase by approximately 1.3mn tonnes, which is roughly equivalent to an additional 5% cement demand growth per annum.

Cement price for mixed cement in the Bangkok metropolitan area picked up slightly in January by Bt40/tonne MoM to Bt2,127 per tonne for mixed cement, while price for portland cement remained flat at Bt2,444 per tonne in December.  Currently, cement companies are achieving an average price of Bt1,788/tonne for mixed cement versus the ex-factory price ceiling of Bt1,958/tonne, and average price of Bt2,054/tonne for portland cement versus the ex-factory price of Bt2,294/tonne. Even though there is little room for retail cement prices to rise, lower discounts on bulk cement are expected to see. Market survey revealed that the selling price of bulk cement has risen by Bt100/tonne this year. This should lead to a slight increase in average achieved cement prices.

Cement exports in 2003 dropped by 25% YoY to 12.2Mt, compared with 16.2Mt in 2002. The decline can be attributed to higher freight costs, and baht appreciation against the US dollar. According to Siam Cement (SCC) and Siam City Cement (SCCC), cement exports are likely to decline further in 2004.