Friday, 5 June 2009

SCG Cement defers Cambodian

By Chalida Ekvitthayavechnukul
The Nation
Published on June 4, 2009

SCG Cement has postponed its plan to build a further kiln in Cambodia following a considerable drop in demand in the neighbouring country.

Thailand's largest cement producer is the major shareholder of Kampot Cement, the biggest cement firm in Cambodia. The plant is located in Kampot province and has a production capacity of 950,000 tonnes per year.

"We earlier planned to build one more kiln to double our production capacity to 1.9 million tonnes, but the plan has been scrapped because demand in Cambodia plunged sharply due mainly to the economic slowdown," said SCG Cement marketing director Syamrath Suthanukul.

Despite the global economic crisis, the company has maintained its export target at 8 million tonnes this year as demand in Bangladesh, Vietnam and Burma remains high.

The company has also explored the possibility of penetrating African markets such as Tunisia and Madagascar, he said.

Meanwhile, SCG Cement forecast that its domestic sales would slump 10-15 per cent from last year's 9 million tonnes, unless special measures were taken. The projection is in line with the overall market, where cement demand is predicted to fall from 25 million tonnes in 2008 to 22 million tonnes this year.

The company has as a result spent Bt70 million on aggressive marketing activities and promotions, in the hope that it can maintain its domestic sales at last year's level.

"We hope the government will start its mega-projects as soon as possible, once Parliament passes the Finance Ministry's planned borrowing of Bt400 billion. The earliest recovery we see for the cement sector is the fourth quarter of this year," Syamrath said.

Sales revenue is likely to drop from last year, even if the company can maintain its volume. This is because of the upward trend in energy prices, freight costs and tougher domestic competition, he added.

He said the prices of some SCG Cement products had been cut by at least 10 per cent since the beginning of the year, in order to maintain market share and compete with rivals that were dumping prices to increase their sales.

However, the company can save Bt1.64 billion per year on energy, thanks to its installation of waste-heat generators at six cement plants.

SCG Cement currently operates at 70 per cent of its capacity. It has a 40-per-cent share of the Thai cement market.

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