Fitch Ratings expects demand for cement in Thailand to increase over the next couple of years based on recovery signs in private construction.
Cement consumption should rise from a pick-up in residential property development, mass-transit extensions and a strong pipeline of new commercial buildings, including several mega mixed-use projects in key Bangkok city areas, the ratings agency predicted in a press release on Tuesday.
The aggressive construction should not only boost sales volume, but also improve product prices and operators’ profitability. Fitch expects the profit margins of cement and building-materials businesses to gradually improve over the next three years.
Oversupply in the domestic market and a profitability gap between domestic sales and exports are driving local cement producers to expand regionally. While other operating markets have also seen challenging conditions similar to Thailand’s, diverse cash flow sources should help reduce cash flow volatility across the business cycle and single-market concentration risks over the medium to longer term.