The introduction of slag cement has faced resistance in the Thai construction industry, mainly as a result of stubborn attitudes towards a new product. Nevertheless, Siam Cement believes it can change perceptions, and sees Thailand's expanding construction sector as fertile ground.
Thailand is one of the largest cement producers in southeast Asia and is an important supplier to the international market. Most of the Kingdom's production is of Portland cement though smaller quantities of speciality cements such as white cement, oil well cement, masonry cement and others are made as well.
One product that has been absent from the cement market is slag cement. Steel production in Thailand uses arc furnace technology and most of the slag waste produced locally is used for road construction.
With the coastal region's obvious potential markets for slag cement, at least one slag reprocessing company currently is trying to interest cement companies in trialling production of slag cement using arc furnace slag. The firm's initiative follows an earlier decision by Siam Cement Industry Co Ltd, the country's largest cement manufacturer, to produce a trial batch of slag cement made using imported blast furnace slag that is being sold in coastal provinces that provide a natural market for marine cement.
Siam Cement imported a single 30,000t shipment of blast furnace slag from Japan in 2005 which was delivered to the company's Thung Song plant in Nakorn Sri Thammarat in southern Thailand. The imported slag was ground and mixed in the ratio of 50:50 with the company's Portland cement to produce 60,000t of slag cement. To test the market the cement was offered both bulk and bagged, though most of the slag cement has been supplied in bulk.
"Our new slag cement brand which we have sold very slowly is called 'Marine Cement'. We have sold this cement in southern Thailand only, as there are many towns and infrastructure close to the sea," explained a Siam Cement spokesman. "We supply Marine Cement bagged for house construction and in bulk for infrastructure projects. This cement is priced higher than Type 1 cement and the same as our Type 5 cement," the spokesman added.
Siam Cement is part of the diversified Siam Cement Group and remains an independent company, unlike several other Thai cement makers that have foreign shareholders. The company's decision to trial launch slag cement was taken following four years of continuous growth in domestic cement demand as part of a broader initiative to seek new local and international cement business opportunities. Although sales have been slower than expected, the company continues to promote the use of slag cement, believing that the right conditions exist for the eventual development of a slag cement market.
Changing perceptions
Although slag cement offers enhanced properties for marine construction use, Thailand's construction industry retains traditional local attitudes regarding cement use which are proving slow to change. A Siam Cement spokesman elaborated: "In the old days we had Thailand Type 5 cement as marine cement. There is belief in its sulphate resistance among engineers." The spokesman added: "Earlier we had only Thailand Type 1 cement, better than Type 5, but it is difficult to change people's beliefs. We have Type 5 for marine structures. In the next step we tried to introduce pozzolan cement before the 1997 economic crisis. The technical know how for Type 5 cement is better in Thailand than for slag cement, Type 1 and pozzolan which are better suited to marine use."
The trial launch of slag cement and the development of an effective marketing programme have proven to be a challenge. Results so far indicate that establishing slag cement as a mainstream product in Thailand will involve long term efforts to achieve a significant sales volume.
Marketing bagged and bulk slag cement involve different strategies, as most bagged cement in Thailand is sold to individual house builders while contractors undertaking infrastructure and other large projects require bulk cement supplies.
Selling bagged slag cement to the housing construction market involves explaining the properties and advantages of slag cement to individual house builders through sales literature and by cement sales agents. "For infrastructure construction we have to persuade the Highways Department, the Port Authority and others to specify slag cement. We have done many presentations in southern Thailand and showed people our test results with slag cement," the spokesman said. "We have sold over 50% of the slag cement we produced. We feel that it is possible to develop a market, but it is hard work."
Pricing is an issue in developing slag cement sales as Siam Cement wants to position slag cement at the top end of the cement market. Convincing building material buyers to pay more for their supplies is never an easy task.
"Our idea is that slag cement should sell at a premium to Type 5 and pozzolan cement," the spokesman explained. "We are supporting academic studies that show slag cement is a durable cement. Now we are educating people. The topic of durable concrete is a major topic of study now."
The establishment of slag cement standards by the different government departments and agencies will be another important step in establishing the slag cement market. Currently no slag cement standards exist in Thailand for port or highway construction, for example, but this is expected to change in future as more academic research is done and the impact of age and wear show on existing concrete structures made of other cement types.
"We choose a 50:50 proportion for our slag cement as it is the best mixture for chloride permeability. We found that 50:50 is optimal compared with using a higher slag proportion," the spokesman commented. "For real concrete structures it takes a long time to see comparisons in wear and ageing. The first expressway made of concrete in Thailand is still only 25 years old, but in the laboratory we simulate many conditions to compare Type 5 cement and slag cement."
"We know slag cement is better, but it is difficult to change peoples' beliefs. We keep talking to people to encourage them to change their cement use specifications. We also look for other opportunities to make more durable cements. In future, government departments will have slag cement standards such as the Royal Irrigation Department, the Highways Department and the Ports Department. The new generation of Thai engineers is important in introducing this," said the spokesman.
Production costs are another factor that will need to be controlled if slag cement use is to develop. Slag is a low value material and the cost of using slag increases with transport distance. To be economically viable the cost of using slag has to be competitive with other alternative materials. The spokesman noted that local blast furnace slag supplies are a possibility in the future.
"We do not have blast furnace slag in Thailand so we have to import. We chose Japanese slag as it is easily available," the Siam Cement spokesman said. "The property of local arc furnace slag is not so suitable for cement, but blast furnace slag is OK. There is a project on paper for a blast furnace steel mill in southern Thailand which will produce slag but maybe it will not happen for another five years."
Production capacity
Siam Cement's decision to launch trial production of slag cement in 2005 was made as Thailand's cement market entered a fifth year of continuous growth in a long recovery from the sharp fall in business that marked the aftermath of the 1997 economic crisis.
With domestic cement consumption growing until recently, Siam Cement has been looking at various ways of boosting business and utilising some of its large unused cement manufacturing capacity. The spokesman noted the company is also looking for international business opportunities and is building a cement plant in neighbouring Cambodia while studying business opportunities in the fast developing Vietnamese market.
Siam Cement is Thailand's largest cement manufacturer with a grey cement production capacity of 23Mt a year. The company uses three brands in the domestic market – Elephant and Erawan brand Portland cement, and Tiger brand mixed cement. Oil well cement is supplied to Thailand's oil and gas production industry.
Siam Cement owns six cement plants, including one that makes white cement. The Thung Song plant, where the slag cement was made, in Nakorn Sri Thammarat in southern Thailand is the company's second largest plant and is installed with six kilns which are designed to produce 6.9Mt of cement a year and 18,000t of clinker per day.
The Thung Song plant supplies the southern Thailand market while the Lampang plant in northern Thailand supplies the surrounding northern market. The Lampang plant is installed with one kiln which is designed to produce 2.1Mt of cement a year and 5500t of clinker daily.
Bangkok, and the central and eastern Thailand markets are supplied by three plants located in Saraburi in central Thailand including Siam Cement's largest plant at Kaeng Khoi. Installed with four kilns, the plant can produce 7.29Mt of cement a year and 19,000t of clinker per day.
Also in Saraburi is the Ta Luang plant installed with two kilns with a production capacity of 3Mt of cement a year and 8000t of clinker daily. Nearby is the Khao Wong plant installed with one kiln which is designed to produce 3.8Mt of cement a year and 10,000t of clinker per day.
Siam Cement's white cement plant is located in Saraburi as well. The plant is installed with two kilns which are designed to produce 140,000t of white cement a year and 440t of clinker daily.
Siam Cement produced about 15Mt of cement in 2006, a similar volume to output the previous year. The company originally expected to produce about 16Mt in 2006. However, domestic demand was affected by the September 2006 political coup that toppled Prime Minister Thaksin Shinawatra, causing economic and political uncertainty. Domestic demand was further affected by severe flooding late in 2006, though demand began picking up again early in 2007. Exports, meanwhile, are largely unchanged.
Siam Cement – the future
Siam cement is primed for future growth, the company spokesman explains: "Exports account for one third of our cement production. There is a little growth but overall export business is quite stable," the Siam Cement spokesman said. "Now we are looking for growth. We are not just concerned with cement production quantity but also with customer service and cement quality. We always position ourselves in the medium to high end of the market."
Bangkok accounts for 20% to 25% of Thailand's total cement market. Following completion of the new Bangkok international airport, the Bangkok cement market is expected to grow once again as construction proceeds on three new underground railway routes that are due to be completed over the next two or three years.
Infrastructure is 30% of Thailand's cement market while the commercial sector accounts for 20% and the residential sector 50%. The government housing sector is small and represents just 10% of total housing while private housing construction is 90% of the residential market. Housing construction had been rising in various cities including Bangkok, Chiangmai, Phuket and Pattaya until the September 2006 political coup and later flooding which slowed down housing construction and cement demand.
"It's mostly houses that are being built; only Bangkok has condominium blocks. The housing market is stable at present," the spokesman remarked. "There are still some empty condominiums and office complexes that are seeking new investors."
"The domestic cement market was flat last year [in 2006] while in 2005 there was about 10% growth. There were many infrastructure projects being built including the new Bangkok international airport, various government and private projects, and the new Bangkok Ring Road. The new airport will have three runways eventually. Two are finished while for the third they are improving the soil condition. Maybe this will be built in four to five years time."
