Connect with us
The clever new way to send money abroad

commodities

Fiber cement exports: how to crack the market?

Fiber cement is wood substitute made from portland cement mixed with natural fibers and other ingredients. It is light, durable, non-flammable, resistant to water and insects, and costs roughly the same as actual wood.

Published

on

Fiber cement is a new type of building material whose popularity has been growing over the past five years.

Fiber cement is wood substitute made from portland cement mixed with natural fibers and other ingredients. It is light, durable, non-flammable, resistant to water and insects, and costs roughly the same as actual wood.

Because of its superior properties it has become the replacement product of choice in many different contexts, including flooring, siding, roofing and as ceiling boards.

Highlight

  • The growth of the Thai fiber cement market is currently driven by exports, which rose at the rate of 16% CAGR between 2011-2015. The expansion can be attributed to rising demand thanks to recovering economic conditions in major export markets, such as the Philippines and CLMV countries.
  • Businesses should prioritize sales and management of distribution channels in the Philippines, Myanmar, Vietnam, and Cambodia, as these markets rely largely on Thai exports, with import demand projected to rise further.
  • In addition, manufacturers may also consider trying to open up the markets in Taiwan and South Korea. With high import values overall but minimal Thai imports, the two markets present the Thai fiber cement industry with new opportunities.

 

Currently there are six major players in Thailand, with a combined manufacturing capacity of 2.2 million cubic meters and a market value totaling THB 14.5 billion, or 20% of the cement market’s total value. Between 2011-2015 the fiber cement market grew 2% CAGR. SHERA and SCG are the two market leaders, each sharing 38% of the market, followed by DRT, CONWOOD, ORAN, and TPIPL, respectively (Figure 1)

While domestic sales have shrunk, growth has been driven by exports to the Philippines and CLMV markets.

Domestic consumption makes up 25% of the fiber cement market, with the rest supported by exports. In Thailand, the market for fiber cement, especially roof tiles, has been affected by the relatively low price of metal roofing sheets in the past 5 years. Coupled with more intense price competition after TPIPL’s entrance into the market, the domestic market value has shrunk from THB 11.3 billion in 2011 to 10.3 billion in 2015, or 2% CAGR (Figure 1).

On the other hand, fiber cement exports have been growing steadily, buoyed by 1) better economic conditions in importing countries 2) recognition of Thai fiber cement’s quality, resulting in demand and 3) the relatively low price of Thai fiber cement (13% lower than fiber cement from major competitor Malaysia). These supporting factors helped raise the export value from THB 2.3 billion in 2011 to THB 4.2 billion in 2015, or 16% CAGR (Figure 1). The figures demonstrate the potential for more export growth, which can also help compensate for the loss of domestic sales.

The fiber cement export market can be divided into three segments. Each requires a different marketing strategy. EIC divides the export market based on market share and the rate of import growth. The three groups are 1) “High Share & High Growth”: the Philippines, Myanmar, Vietnam, and Cambodia 2) “High Share & Low Growth”: Lao PDR and 3) “Low Share & Low Growth”: Taiwan and South Korea.

In the High Share & High Growth category, businesses should prioritize the management of distribution channels, including the expansion of branches and management of product stock in order to meet the growing demand in countries such as the Philippines, Myanmar, Vietnam, and Cambodia. Partnerships with distributors with access to a large number of buyers would seem to be the best option, as proven by the success of SHERA in penetrating the Philippine market in 2013 through its partnership with a major local building material modern trade retailer (CW Home Depot), resulting in Thai fiber cement’s impressive growth rate of 30% CAGR from 2013 to 2015 in that country.

In the High Share & Low Growth group, businesses should try to keep their current market shares, while looking for growth opportunities. Due to the rather saturated market, businesses don’t need to expand their distribution…

Author: Kanit Umsakul 

Source link

Click to comment

Leave a Reply

Markets

Thai Mango growers complain of low prices and fewer exports

Because of the global COVID-19 pandemic, their mangoes are not being exported, due to fewer buyers, and their prices have plunged to between 10 and 20 baht per kilogram, depending on size.

Published

on

Mango orchard owners in Thailand’s northern province of Phitsanuloke are seeking help from the provincial administration to promote the sale of their sweet fruit, particularly Barracuda Mango variety.

(more…)
Continue Reading

commodities

Covid-19 and food security: can emerging economies mitigate rising prices?

The Food Price Index, established by the UN’s Food and Agriculture Organisation (FAO) to track monthly changes in international food prices, rose for the eighth consecutive month in January, primarily as a result of Covid-19.

Published

on

Covid-19 and food security: can emerging economies mitigate rising prices?

An increase in food prices following the coronavirus pandemic has intensified concerns related to global food security. For emerging markets, this has further underlined the importance of regional cooperation and innovative solutions to help overcome the challenges.

(more…)
Continue Reading

Most Read

Recent