SCG Cement defers Cambodian expansion

June 4, 2009
By Chalida Ekvitthayavechnukul
The Nation

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.

Siam Cement Group eyes concessions in Laos, Cambodia

Friday May 09, 2008
NAREERAT WIRIYAPONG
Bangkok Post

Siam Cement Group (SCG), the country's largest industrial conglomerate, will seek concessions for eucalyptus forestation in Laos and Cambodia to secure raw material supplies for its paper business. Poramate Larnroogroj, managing director of Siam Forestry Co, an affiliate of SCG Paper, said the company had started growing eucalyptus in pilot areas in the two countries.

Siam Forestry decided to look abroad after developing about one million rai of eucalyptus in Thailand, mainly in Kamphaeng Phet, Kanchanaburi and Khon Kaen.

''We have started discussing the possibility of getting the concessions there. It would take two to three years to implement the project,'' he said.

New eucalyptus plantations should be in areas where the wood can be conveniently shipped to SCG Paper's pulp factories in Thailand's northern and northeastern regions, said Mr Poramate.

''We are looking to secure raw-material supplies in the long term after there is no more area for eucalyptus in Thailand,'' he said. ''It is critical to make sure we have enough material for paper production in the future.''

Material security is a major concern as prices of pulp and other raw materials for paper production have surged.

Currently, short-fibre pulp is traded at $725 per tonne, up $40 from the same period last year, while long-fibre pulp prices have risen 15% to $760, pushed by strong demand and tight supply.

Siam Forestry's short-fibre eucalyptus serves SCG Paper's plants while long-fibre pulp is imported from Europe and the United States. SCG Paper has to import scrap paper from the US, Japan, and Singapore because of inadequate supply locally. Imported scrap prices have risen to $250 per tonne from $140 a year ago, while domestic prices are up from four baht a kilogramme to six baht.

SCG Paper, one of the four flagships of Siam Cement, generated total sales of 12.25 billion baht in the first quarter of this year, up 12% year-on-year, thanks to higher product prices. However, net profit fell 20% to 740 million baht due to surging fuel and raw-material costs.