INDIA: SCG: Cement sales on track for year

Siam Cement Group (SCG), Thailand's top industrial conglomerate, says its cement sales volumes this year remain on track to grow 5% over 2010 despite severe flooding but margins will be squeezed due to price reductions and rising fuel costs.

Pramote Techasupatkul, president of SCG Cement, said cement consumption had softened in the third quarter after falling short of the expected 5% growth in the first six months.

However, demand could pick up after floodwaters subside, especially in the final quarter when the government is expected to start some large-scale infrastructure projects.

But the recent price reduction of cement by 5-10 baht per 50-kilogramme bag as requested by the government will put pressure on the company's margin. Meanwhile, energy costs, pushed mainly by strong coal prices, are increasing.

"The reduction in gasoline and diesel prices (following cuts in Oil Fund levies) has barely benefited us because we use the petrol very little, just for transport," said Mr Pramote, who is also the chairman of the Thai Cement Manufacturers Association.

KGI Securities said 13.9 million tonnes were consumed in the first six months, up 3.4% year-on-year.

"But after moderate growth in cement use during the political transition, quick spending from the public side could increase cement demand in the second half," the brokerage said in a report.

This should result in full-year cement demand growth of at least 5% from 26.7 million tonnes in 2010 to 28 million this year, it said.

SCG Cement, the country's largest cement maker, yesterday joined with second-ranked Siam City Cement Plc (SCCC) in launching the Cement Partnership Initiative through a project called Rong Poon Ruk Chum Chon (Cement Factory Loves the Community).

The initiative, which started late April, comprise three environmental activities involving the alliance's cement factories in Saraburi including green mining, production process and transport.

The production process, for example, focuses on reducing greenhouse gas emissions, and lower consumption of fuel and water.

"Saraburi is our second home since it has hosted the cement industry alongside local people in surrounding communities for a long time," Mr Pramote said.

This landmark cooperation should be expanded to other areas where cement factories are located and with other cement manufacturers to promote sustainable development for the industry, the two companies said.

Chumpon Lertchuwongsa, an SCCC vice-president, said the partnership would also focus on improving the economy of local communities as well as better living standards for children and young people in the province.