Sunday, July 26, 2009

Siam Thailand's Cement sees 2009 cement demand falling 5-10 pct

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

Siam Cement, Thailand's biggest producer of the building material, predicted domestic consumption of 23 million tonnes 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 percent. 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 1.43 trillion baht ($42 billion), 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 percent this year after 2.6 percent 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 percent to around 7.6 million tonnes this year because of the global economic crisis. Its main overseas markets are in South and Southeast Asia.

Last year, it shipped about 8 million tonnes.

COST SAVINGS

A 5.8 billion baht 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 percent, Pramote said.

The company would invest another 0.5 to 1.0 billion baht on improving energy efficiency at its cement plants over the next four or five years, he said.

Last year, cement earnings increased 10 percent, 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 100 million baht 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.

Siam Cement is the biggest domestic cement producer with capacity of 23.2 million tonnes. Its cement plant in Cambodia has a capacity of 1 million tonne.

At 0751 GMT, shares in Siam Cement, valued at $5.9 billion on the Thai bourse, were up 2.4 percent at 170.5 baht and the main Thai stock index <.SETI> was also 2.4 percent higher. ($1=34.03 Baht)

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