Asian cement makers chase volume over price: Siam City Cement

Bangkok-based Siam City Cement, or INSEE, is not seeing the kind of cement production restraint used in parts of Europe to protect margins, with regional supply-demand dynamics making such a strategy unworkable in Asia's large, volume-driven markets, Raju Goyal, the company's head of group technical services and capability building, told Platts on the sidelines of the World Cement Association's annual conference in Bangkok April 20.

"There are two games, the volume game and the price game," Goyal said, adding that while in India, producers continue to add capacity despite utilization, in Europe, where demand growth is minimal, producers can limit "production and increase the price."

Goyal said such margin-defense production curbs are "not happening across [the] world," and "it's not possible" everywhere, particularly in large markets.

He added that "for the large countries, large production, increasing the price by limiting production is not possible."

China downturn is demand-led

Goyal said that in China, where domestic cement demand has been declining, the downturn is not a deliberate attempt to protect margins but a function of structural demand saturation.

"They are not reducing capacity purposely because there is no demand. There's no demand," he said, adding that after around two decades of construction-led growth, demand has hit a plateau and moved into decline.

He also pointed to rising environmental and CO2-related pressure, including restrictions on older plants and a push for efficiency gains.

Indonesian coal integration

Goyal said that INSEE's Thailand operations have around 15.63 million metric tons/year of capacity, and despite its wider regional footprint, current sales are "all domestic."

Goyal said INSEE has not faced procurement challenges linked to recent geopolitical tensions in the Middle East, citing its energy sourcing arrangements tied to Indonesia.

"Our energy sources [are] from Indonesia, where we have [our] own coal mine," he said, adding that relatively few cement producers have a captive coal supply.

Clinker substitution, efficiency

Speaking at his plenary session, Goyal said that clinker reduction, energy efficiency, and alternative fuels are the most immediate and cost-effective emissions levers for cement producers, while carbon capture, utilization and storage are necessary, but come at a later stage.

Product mix using materials such as slag and limestone can shift the carbon footprint of cement, he said, adding that the role of alternative fuels and plant efficiency measures depend on local market and policy conditions.

CCUS, while "critical" and "crucial," should come after other levers have been pushed, Goyal said.

Goyal said deeper decarbonization will require enabling conditions beyond plant-level measures, including regulatory frameworks, financing support, technology development and pilots, infrastructure build-out and early offtakers to help scale low-carbon products and, eventually, CCUS.

Platts, part of S&P Global Energy, assessed cement clinker FOB Turkey at $46.5/metric tons April 16, unchanged week over week.