Mandalay’s cement market heats up

The annual building season in Mandalay may be slowing down as the monsoon approaches but the battle to be the nation’s number one cement is heating up, with new brands challenging more established products in the fight for market share.

Competition in Mandalay’s cement market is strong as the dry season, when most building work is done, comes to a close. In this picture construction workers in Yangon pour concrete at a site. (Yadanar/The Myanmar Times)

Established brands such as AAA, Tiger Head and Myanmar Elephant all made strong sales during the dry months when the building industry is busiest.

“We supply 8000 bags or 400 tonnes a day but it is not enough for the market,” said U Khin Maung Soe, sales manager of Tiger Head cement. “We distribute for both retail and wholesale because we have not linked with any particular development projects like other cement companies – and sometimes we can’t meet demand. But customers tend to stick to a brand when they trust it,” he said.

U Maung Maung Oo, an agent for Myanmar Elephant Cement, said the company built a new factory in December 2012 and saw a 25 percent increase in sales over the past 12 months. “We have seen a surge in demand,” he said.

The national cement market has traditionally relied on imports but he said Mandalay’s market had recently chosen domestically produced products, adding that brand loyalty is strong.

“Last year, a cement brand from Yangon entered the industrial zone where we are based but they closed up within a short period,” U Maung Maung Oo said.

The wholesale price per bag for Myanmar Elephant is about K5200 and the retail price is K5400. He added that Elephant brand cement from Thailand costs about K6400 a bag.

He added that demand for cement for the future looks strong because there are so many construction projects in the city.

Myanmar had just three or four cement factories before 1988 but there are now about 15 factories? which are collaboratively operated by the government and the private business sector. Most of the factories have the capacity to produce about 1000 tonnes a day.

In addition to domestic brands, foreign brands are imported from China or Thailand.

The most famous import brand is Elephant, some 1.9 million tonnes of which was imported last year, said the managing director of SCG Trading Company, which produces Elephant Cement, Mr Soontornpol Veerapravati during a press event in Yangon last year. He added that the company expected to export more than 2 million tonnes of cement to Myanmar this year.

In addition to competition from Thailand, Mandalay’s cement producers sometimes are challenged by Yangon cement makers. However, U Khin Maung Soe from Tiger Head cement said transportation costs are a major deterrent for cement makers from the south to enter into Mandalay market.

“Last year, we saw Green Dragon enter the market but now it has disappeared,” he said.

Another new brand Ngweyi Pearl is also now available in the Mandalay market, and more are expected, he said.

Source: Myanmar Times

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