Further price hikes coming for Malaysia's cement industry

 Further price hikes coming for Malaysia's cement industry
03 August 2021

Malaysia's cement sector is expected to see further cement price hikes, according to AmBank Research. AmBank Research also projects the average net cement selling price in Peninsular Malaysia to rise marginally by two per cent to MYR240/t (US$56.8/t) in 2021 against an estimated price of MYR235/t in 2020. 

The research house believes that the conditions are conducive for further price hikes with the emergence of a price leader in the market (controlling close to 60 per cent of total industry clinker capacity) following YTL Cement Bhd’s acquisition of Malayan Cement Bhd in 2019.  

AmBank Research has maintained its 'overweight' rating on the sector and noted that production restraints following the consolidation should lift the implied value of clinker capacity. 

"Post-pandemic and upon the recovery of the two key cement-consuming industries, such as property and construction, a demand-fuelled re-rating is imminent, although visibility is still lacking at this juncture," the research house stated. 

The supply pressure is also expected to ease after Malayan Cement and Cement Industries of Malaysian Bhd put one clinker plant offline, effectively removing clinker capacity totalling 2Mta, equivalent to eight per cent of total domestic clinker capacity, from the market.

"With the price hikes, we expect players to return to the black in a more decisive manner in the coming quarters," said AmBank Research. 

AmBank Research foresees cement consumption in the Malaysia peninsular to be flat at 4.2Mt in 2021. 

Published under Cement News