Ceramic tile producers SCG Ceramics Plc and Dynasty Ceramic Plc are anticipating a resurgence in demand in the low-end market in the third quarter of 2023, following the establishment of a new government.
Nampol Malichai, managing director of SCG Ceramics, said the general election on May 14 is expected to have a positive impact on the ceramic tile market, potentially leading to a surge in demand during this year's third or fourth quarter.
"The extent of the positive impact of the general election on the ceramic tile market would depend on how quickly a new government is formed," he said.
Despite an increase in sales generated by projects, the performance of SCG Ceramics remained stagnant in the first quarter of 2023, primarily due to a deceleration in sales in the low-end segment which received an impact from inflation, he said.
In the second quarter, sales are expected to increase slightly, as project sales remain robust and the recovery of the tourism industry is driving demand in tourism-related locations, said Mr Nampol.
Maruth Saengsastra, chief executive of Dynasty Ceramic, said the firm's revenue in the first quarter this year fell short of the target, as the low-end segment, which is its main market, remained sluggish.
In January 2023, the company recorded a significant decline in sales, with a year-on-year decrease of 14.2%, the most significant drop in several years.
To stimulate sales and remain competitive, it revised down its wholesale prices in February and March, resulting in a 4% decrease to an average of 150 baht in the first quarter, down from 156 baht in the fourth quarter of 2022.
Despite the Songkran holiday, which typically generates a good rate of sales, sales remained sluggish and have not experienced any significant recovery in this year's second quarter.
"The deceleration in the low-end market is expected to persist until the third quarter, as demand from major markets such as farmers would remain sluggish," he said. "The provinces that are dependent on tourism are seeing a gradual recovery."
Although demand in the middle-to-upper-end markets remains strong, the overall ceramic tile market is expected to decline by 5% this year, mainly because the low-end market is significantly larger than the others, said Mr Maruth.
Dynasty forecasts growth of 5% in 2023 as the ceramic tile market is expected to recover in the second half, driven by sales in the middle-to-upper segments that the firm is targeting, Mr Maruth said.
