This report profiles Malaysia’s cement industry, discussing market trends through 2013 and outlook for 2014 and beyond. The report also highlights leading players in the sector including Lafarge Malayan Cement Berhad, Tasek Corporation Berhad and Cahya Mata Sarawak Berhad.

The cement industry is one of the strategic industries of Malaysia, acting as a feeder to several other industries like real-estate, construction and infrastructure. The Malaysian cement industry has witnessed strong growth in demand during the last three years, backed by government spending. This demand growth is driving many cement companies towards capacity expansion.

Going forward, cement demand is expected to follow the growth trajectory driven mainly by the continued progress of government-led investments and key infrastructure projects as well as on-going residential and commercial developments. The 10th Malaysia Plan and Economic Transformation Programme (ETP) will be the key drivers for the industry growth.

However, the hike in electricity tariffs from January 2014 is expected to bring down the margins of cement manufacturers, which may tempt them to increase prices further. The major challenges facing the local cement industry are rising fuel prices and transportation costs. The industry will also have to meet global pollution and emission standards which will take considerable amount of investment.

Key Points:

• The Malaysian government has allocated MYR 230bn for development expenditure under the 10th Malaysia Plan (2011-15), and decided to invest substantive portion of the amount in developing infrastructure across the country.

• The recent growth in demand for cement is driving many companies towards capacity expansion. West Malaysia led in terms of integrated production capacity accounting for around 91% of the existing capacity, while East Malaysia accounted for 9%.

• During 2009-10, domestic annual cement consumption posted a slowdown. However, the industry saw a steep demand recovery during the last three years growing at a CAGR of 5.7%.

• In 2013, total domestic cement production was at around 21.5MT, which was equal to only 61% of the country’s total installed capacity. Total cement production declined by 1.2% in 2013, after growing by 2.5% in 2012.