Thai Cement Producers Push for Foreign Markets

As Thailand's construction market slumps, cement producers step up efforts to explore foreign markets

The domestic cement market remained sluggish in the first four months of 2008, mainly affected by various factors, including the sharp rise in energy prices and building materials prices, the impact of rising inflation on consumers' purchasing power, and the lack of large-scale investment projects for public investment by the government. As a result, cement producers need to adjust and try to open up foreign markets. However, due to the slowdown of world economic development affected by the subprime mortgage crisis and the high inflation faced by all countries in the world, cement exports shrank in the first four months of this year, while cement exports continued to grow in the previous three years, but cement exports still increased. The main reason is that the price of cement has risen.

After analyzing the cement demand trend in the second half of 2008, Taihua Farmers Research Center believes that the domestic market will still face many risk factors, including the rising cost of living and the rising trend of interest rates, which will affect the purchasing power of the people. At the same time, the prices of energy and building materials have risen sharply and will continue to rise in the second half of the year, leading to the suspension of new projects by real estate developers and the suspension of new projects by construction contractors because they do not want to take risks from the price fluctuations of building materials. In addition, the political stability in the next stage may affect the confidence of the private sector and cause the government to postpone the implementation of large-scale investment projects. The construction and real estate sectors are expected to continue to slow down in the second half of this year due to increased risks. Despite the stimulus of tax incentives for real estate and the support of special credit projects from state-owned banks, it must be recognized that the pressure on consumer purchasing power is still increasing. In view of the above reasons, Taihua Farmers Research Center predicts that after the domestic cement demand shrank by 5% in 2007, the domestic cement demand will continue to shrink by about 2.5% year-on-year in 2008, from 28 million tons in 2007 to 27 million tons.

As for foreign markets, the Taihua Farmers' Research Center predicts that cement exports will shrink by 1.9% in 2008 from an increase of 24.1% in 2007, from 18.65 million tons in 2007 to 18.29 million tons. This is mainly due to the impact of rising oil prices on the costs of producers, the inflation problems faced by all countries in the world, and the recession problems faced by major trading countries such as the United States and Vietnam. However, producers have opened up new markets, such as the Middle East, Asia, Africa and other countries, and their demand for cement is still relatively high, because the construction industry in many countries in these regions is still growing.

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