JAPAN: Japan's cement makers boost Asia-bound exports

Japanese cement producers are turning to exports to compensate for sluggish domestic demand. The latest numbers suggest their strategy is paying off.

"Japan's cement exports are growing," Akira Fujisue, a senior official of the Japan Cement Association and senior managing executive officer of Sumitomo Osaka Cement, told reporters in November. He pointed to good business prospects in Singapore and other Asian markets.

Indeed, cement exports in October surged 58% on the year to 871,000 tons -- partly due to a decrease in production a year earlier while factories were being refurbished. Exports also registered year-on-year growth from November 2014 through July 2015. 

Thanks to increased demand in Asia, the Japan Cement Association estimates exports in fiscal 2015 -- through this coming March -- will rise 6% to 10 million tons. 

Cement sales in Japan are on the decline amid a slowdown in public works projects. The association now estimates domestic demand at 44 million to 45 million tons for fiscal 2015, down from a previous estimate of 46 million tons. This would mark the second straight year with a fall in demand.

Construction companies have also been shifting to building methods that require less cement, shrinking the market further. The bleak outlook at home is spurring cement makers, which have been exporting around 15% of their output, to try to ramp up shipments abroad. 

Port, road and other infrastructure projects are underway around the region. Shipments to Singapore, in particular, have risen because of highway construction there. Demand in Hong Kong is robust as subways and highways are being built.

Against this backdrop, Taiheiyo Cement has boosted its storage capacity in Singapore by 50%, to 74,000 tons. The company is pushing a high-end product in the city-state -- a mixture of regular cement and coal ash. A hit in Asian and other emerging markets, it does not crack easily when turned into concrete.

Mitsubishi Materials, meanwhile, aims to raise its supply capacity in the U.S.

Strong demand is keeping export prices high. Major Japanese cement producers and Asian buyers have negotiated export prices of $40 to $45 per ton for fiscal 2015, in free-on-board terms. That price level is roughly the same as last year's; prices had been rising since 2010.