Thailand: Cement Industry Development Will Depend on National Large-scale Projects Next Year

    The development of Thailand's cement industry next year will depend on the investment in public construction projects, especially the government's large-scale projects, which will greatly promote the development of the cement industry, according to the Thai Research Center KASIKORN Research Center (K Research). This year, the growth rate of the cement industry has declined. Although domestic demand was strong in the first half of the year, it began to cool down in the second half of the year. This was mainly due to a slowdown in public construction in the third quarter, and private construction also declined due to the weak real estate market.

    KResearch estimates that the domestic cement turnover will reach 29.7 million tons in 2005, up 9.2% from 27.2 million tons in 2004, but the growth rate has declined to 12.2% last year.

    In 2005, the export of cement reached 15 million tons, with sales of 440 million US dollars, an increase of 26% and 41% respectively over the same period last year. In 2004, it exported 11.9 million tons, with an export value of 312.1 million US dollars. The increase in exports is mainly due to demand from cement markets in the United States, Thailand's neighboring Southeast Asian countries, and penetration into the Middle East and Latin American markets.

    This year, while domestic market demand is declining, cement production capacity is expected to reach 38.5 million tons, an increase of 8.2% over the same period last year. At the same time, the utilization rate of cement production capacity will rise to 67.5%, up slightly from 62.8% last year.

    Although Thailand's property market will remain weak next year, private construction is likely to decline, but large-scale government projects are likely to increase. Overall, cement demand in the domestic market will rise by 15% to 34.1 million tons if the country's large-scale construction projects go ahead as planned. This figure is higher than forecast growth rate of 9.2% in 2005.

    However, KResearch has also done a more comprehensive analysis. Next year, delays in investment in public transport and electric trains or insufficient government revenue may affect the smooth implementation of large-scale national construction projects. If this happens, the construction of large-scale national projects will be reduced, and the domestic demand for cement in 2006 will be 32.7 million tons, an increase of about 10%.

    Overall, Thailand's cement production capacity will increase to 42.4-43.6 million tons in 2006, an increase of between 10 and 13%. Cement capacity utilization will increase to 75%, higher than utilization rate in 2005.