Financial Times

Cement market stagnant as reconstruction delayed
The market for cement has not picked up yet despite expectations of a construction boom in the wake of the destruction wrought by the tsunami.
Cement prices dipped in the middle of the year, as bulk importers shipped more than the usual requirements in anticipation of reconstruction work, but have subsequently recovered.

“The market has not picked up yet. It is growing in a very small way,” said S.R. Gnanam, Joint Managing Director of Tokyo Cement. “So far this year, growth has been about seven percent, very similar to what it was last year.”
Although there has been very little reconstruction work in the first six months of the year, Tokyo Cement is hopeful demand would pick up in future, he said.

Demand from housing projects would be limited given the small volumes required for building homes and long duration of the projects.But demand would pick up once infrastructure projects, such as those to rebuild schools and hospitals, get underway, Gnanam said. Cement suppliers have offered the government a special rate for requirements for the tsunami reconstruction work. Another cement manufacturer and importer said they were forced to cut prices after bringing in extra shipments in anticipation of a surge in demand.
A company official said delays in acquiring land for housing was holding up the reconstruction effort. “We anticipated huge demand growth but that has not happened yet,” he said. “In fact prices came down by 10 percent as some people started importing more. Since the market had not expanded, but supply increased, prices were forced down.”

The shortage of sand for building, because of environmental restrictions, also affected construction work and the market for cement. Sri Lanka’s total annual cement consumption is around 2.8 million MT of which about half is imported. Gnanam said Tokyo Cement expects to take delivery of its third ship - a bulk carrier for carrying clinker - next month.

The company, a joint venture between Japan’s Mitsui Mining Company and St. Anthony's Consolidated Ltd., has spent $11.6 million on buying the 25,900 tonne, 20-year old ship which has been named Tabernacle Grace. High freight rates have prompted the group to buy its third vessel to enhance cost savings in future.

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