SCG forecasts regional capacity will hit 292Mta by 2018

SCG forecasts regional capacity will hit 292Mta by 2018
20 April 2016

In a presentation to investors earlier this month, Siam Cement Group (SCG) disclosed that it expects capacity in Thailand and nearby markets will reach 292Mta in two years' time, up from 251Mta in 2015.

Production capacity is set to expand in Thailand, Indonesia, Vietnam, Myanmar, Cambodia and Laos. This comes against a backdrop of existing overcapacity – in 2015 domestic consumption in the six countries was 168Mt, implying a utilisation rate of 67 per cent.

Demand growth in Thailand and Indonesia – together accounting for 60 per cent of the six-country total – was flat in 2015, suggesting that much of the new capacity will be unneeded in the short term.

Growth was stronger in the other four countries, but as yet only Vietnam has a large market, with consumption here reaching 54Mt in 2015.

Thailand’s cement demand was unchanged YoY in 2015. While the government demand grew by 11 per cent, commercial and residential cement consumption fell by two per cent and five per cent respectively. SCG’s earnings on building materials – of which cement is the greater part – fell by 8.6 per cent YoY in 2015, while the Nation reports that this slump looks set to be continued in 2016.

Despite this, SCG is pushing ahead with its plans to construct new plants in Myanmar and Laos. The two 1.8Mt facilities are expected to be commissioned in mid-2016 and mid-2017 respectively.

Published under Cement News