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Global Panorama: Asia

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Data from The Indonesian Cement Association (ASI) confirmed that cement sales in Indonesia were 60 million t in 2014, up 3.3% on the previous year. Semen Indonesia has set aside US$480 million for capital expenditure this year to finance expansion of the Rembang and Padang plants. This should increase the company’s cement production capacity to 31 million tpy. Semen Baturaja also plans to raise production, partly by the addition of a new plant. By 2017, the company’s capacity should stand at 3.85 million tpy. The government would like to curtail investment opportunities in a move to safeguard a healthy business in the industry. Production capacity is currently 77 million t, which is said to be more than enough to meet domestic demand. The military government in Thailand has undertaken a number of measures to revive the economy in recent months, including relaxing martial law in some key areas for tourism and boosting public investment following prolonged political unrest in 2014. Siam Cement has been upbeat in predicting that domestic cement demand will rise by 6% this year from about 40 million t last year. The company is looking for chances to buy assets in Southeast Asia. Meanwhile, Thailand’s second largest cement producer, Siam City Cement PLC announced in February that Holcim had decided to sell its 27.5% stake in the company.

Press reports from Vietnam indicated that in 2014 the country shipped 19.5 million t of clinker and cement. It is forecast to export 25 – 26 million t this year. Countries importing cement and clinker include Indonesia, Malaysia, Bangladesh, Taiwan, the Philippines, Cambodia and Sri Lanka. Good news for Sri Lanka’s cement companies comes with the country’s newly elected government’s budget proposals to remove customs duty on imported cement from Malaysia, Vietnam and Indonesia. The proposals will allow competition with cement arriving from India and Pakistan. Vietnam, Cambodia or Bangladesh could be the recipient of an investment by Semen Indonesia for a new cement plant, if the Indonesian company fails to reach an amicable agreement with a local partner in Myanmar over plans to build a plant. The company has allocated US$50 million each year to support overseas plans. Myanmar’s economy is expected to grow by 7.7% this year and the cement industry welcomes the government’s plans to upgrade, broaden and build roads, bridges, ports, airports, hotels, malls, apartments and hydroelectric dams and plants. While there may be a slowdown in construction before the general election in November, it is likely that there will be a period of intense investments in projects afterwards.

A report on the cement industry in India by the India Brand Equity Foundation suggests that the market will grow at a compound annual growth rate of about 8.96% from now through to 2019. To meet rising demand, cement companies are expected to add 56 million t of capacity over the next three years. Some major investments include JSW’s plans to expand its capacity to 30 million tpy from 5 million tpy; UltraTech plans to set up two greenfield grinding units in Bihar and West Bengal and JSW Cement Ltd has planned a 3 million tpy clinker plant at Chittapur.

Cement production in Pakistan has been growing at over 6% in recent months and at the time of writing the industry was expected to reach 36.6 million t by the end of June 2015. Local press reports say that the private sector is showing strong growth, which is one of the main causes of higher cement consumption in the country. D G Khan Cement is planning to build a 2.0 – 2.5 million tpy plant near Hub, even though the country is struggling with an electricity crisis and outbursts of terrorism.

In January, a report on China from Bloomberg said that, with China’s growth slowing down, predicted to fall to 7% or even lower this year, Beijing will approve 300 infrastructure projects worth a total of US$1.1 trillion for 2015. Although not publicly announced by the government or Chinese media, the move is linked to a larger plan that will see US$1.6 trillion pumped into the Chinese economy by 2016. Infrastructure investments are especially crucial for China’s central and western regions where development lags behind the wealthier coastal areas.

Written by Paul Maxwell-Cook. This is an excerpt from World Cement's July 2015 issue. Subscribers can read the full issue by signing in, and can also catch up on-the-go via our new app for Apple and Android. Non-subscribers can access a preview of the July 2015 issue here.

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