Building material demand up

       The outlook is improving for steel and other construction materials with domestic demand reviving while prices surge with the global rebound, say analysts and executives.
       Cement prices have risen 600 baht per tonne in the past two months, on expectations that the government's economic stimulus package will drive demand to resume annualised growth from the final quarter.
       Steel prices have also increased, with hot-rolled steel prices now quoted at almost US$600 per tonne, compared with the bottom of $400 reached earlier this year, according to the Iron and Steel Institute of Thailand.
       "Domestic prices have started picking up while demand has increased globally," said the institute's director, Vikrom Vajragupta."Prospects are clear that demand from the construction sector will be higher in the next couple of months when the rainy season ends."
       The automotive industry is also recovering while the government's Thai Kem Kaeng -"Thailand: Investing from Strength to Strength"- infrastructure programme will further drive demand in the last three months of the year, he added.
       Pichit Maipoom, president of SCG Building Materials, said the demand for building materials had improved since the second quarter, especially in the provincial market.
       "We expect the industry in the second half will be on par with that of the same period of last year," said Mr Pichit.
       Siam City Cement Plc (SCCC), Thailand's second-largest cement maker,also expects a better performance in the second half as demand for the entire year is projected to slide only 5-7% to 24-25 million tonnes.
       "The overall situation is getting better in the latter half both domestically and globally," said SCCC's executive vicepresident Chantana Sukumanont."The local market in 2010 will be flat from this year in the worst case."
       SCCC, which exports one-third of its output, expects its sales volume to be in line with the overall market this year.
       Analysts are also upbeat on the industry's outlook, saying construction material stocks have surged by about 10% over the past week on expectation of benefits from government stimulus spending and projected better performance in the current quarter.
       Tata Steel (Thailand) Plc (TSTH), the country's largest producer of construction steel, will be among the main beneficiaries as the domestic price for steel bars has edged up from 16-17 baht per kilogramme to almost 20 baht at present,said Surachai Pramuancharoenkit, an analyst at Kim Eng Securities.
       Kim Eng expects domestic demand for cement to grow 10% in 2010 after falling 5% this year. The brokerage has raised SCCC's net profit estimates. It now projects 2009 earnings to be relatively unchanged from 2008, before jumping 22% to 3.83 billion baht next year.
       Shares of Siam Cement (SCC) closed yesterday on the Stock Exchange of Thailand at 219 baht, up four baht, in trade worth 381 million baht. SCCC also rose four baht to 222 baht in trade worth 9.38 million baht. TSTH closed unchanged at two baht in trade worth 111 million baht.