Following an exciting 2016, this year sees opportunities and challenges abound for the Asian cement industry. LEK Consulting gives an overview and outlines strategies that help position cement companies in this part of the world for long-term growth. By Manas Tamotia, LEK Consulting, Singapore, and George Woods, LEK Consulting, Australia.
The year 2016 was an exciting one for Asia’s cement industry. LafargeHolcim continued to trim its presence in the region with disposals in India, Korea, Vietnam and Sri Lanka. It wasn’t the only one that slimmed down. Other examples include a distressed exit by Jaypee in India, sub-scale assets sales by Cemex in Bangladesh and Thailand, and non-core divestment by Hyundai in Korea.
The buyers were local and regional champions: most notably, Siam City Cement’s aggressive expansion into Vietnam and Sri Lanka at prices that initially raised eyebrows but in hindsight look astute – it has created a balanced footprint in a region that appears to be increasingly “swimming” in cement/clinker oversupply. The oversupply is largely a result of the significant overcapacity in China and to a smaller extent, in other prominent producing countries such as Thailand, Vietnam and India.
