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Malaysia anticipates a rise in cement demand

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World Cement,

Increased construction activity in Malaysia is set to boost cement demand, according to a recent report from CIMB Investment Bank Bhd entitled 'Navigating Malaysia 2014'. The implementation of Economic Transformation Programme (ETP) projects, private sector-driven infrastructure and property build-out will increase cement consumption in the country. Total cement industry volume growth is predicted to be approximately 4 – 5% in 2014.

Construction activity

Investment in public transport infrastructure and rail upgrades are the long-term catalysts for the construction and building materials sectors in the country. Major projects include: mass rapid transit (MRT), the extension of light rail transit (LRT), construction of Tanjung Bin power-generation plants and Janamanjung power plants, the Kebabangan gas field, the Sabah-Sarawak gas pipeline, the Pengerang Independent Deepwater Petroleum Terminal (PIDPT), high speed rail (HSR) infrastructure, Tun Razak Exchange (TRX), the Pan Borneo Highway and the West Coast Expressway.

Furthermore, an increase in residential property will contribute to rising cement consumption in the country. The property sector has experienced growth since 2010, with the average house price appreciation rising from 6.7% in 2010 to 9.9% in 2011 and 11.8% in 2012. The Budget 2014 also highlighted allocations for up to 800 000 units of affordable housing over the next five years.

Rising power costs

Despite an increase in cement demand due to increased construction activity, CIMB Investment anticipates that the recent 16.85% average increase in the industrial power tariff could have an impact on cement company’s margins. The firm estimated that electricity usage makes up a relatively large portion of overall production costs, approximately 8 – 10% for Lafarge and 8 – 12% for Tasek Corporation Berhad.

Edited from various sources by Rosalie Starling

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