Tipco Asphalt Plc (Tasco), Thailand's largest asphalt producer, expects its sales to grow by 8.3% this year to 1.3 million tonnes despite a global economic slowdown and possible delay in state spending related to the lengthy process required to set up a new government.
Last year Tasco sold 1.2 million tonnes of asphalt.
Chaiwat Srivalwat, managing director of Tasco, attributed the growth to higher sales in the domestic market as well as in China and Indochina.
Demand for asphalt remains high in Asia as authorities need to build and repair roads, so sales should not be affected by the prospect of a global recession, he said.
Asphalt prices are expected to keep rising, especially in Asia. The market price was US$111 per tonne in the first quarter of this year, up from $92 per tonne in the same period last year.
This trend contrasts with a drop in the price of crude oil, which can be used in the production of asphalt.
The reference price in the Brent market averaged $82.2 per barrel in the first quarter this year, down from $111.8 per barrel in the second quarter of 2022.
Despite strong demand for asphalt, Tasco has not been able to increase sales because of limited feedstocks and shipping services, said Mr Chaiwat.
He said the company has sufficient feedstocks to manufacture asphalt until August.
Tasco plans to buy more crude oil and asphalt produced by oil refineries in Asia to increase its output, said Mr Chaiwat.
The company's annual sales record is more than 2 million tonnes.
In the first quarter of 2023, Tasco sold 320,000 tonnes of asphalt, up 14% from 280,000 tonnes year-on-year.
The uptick was attributed to quick disbursement of the state budget for road projects nationwide.
"The establishment of a new government may cause a delay in budget spending, but plans to allocate money for these projects are still in place," he said.
Mr Chaiwat said he believes Tasco's domestic sales will soar between the fourth quarter of 2023 and early next year, driven by state budget disbursement in December.
A peak for asphalt sales is expected to occur during the first half of next year, he said.
Thanomwongse Service, a road and bridge unit of Tasco, is expected to earn money from backlog projects worth 4.5 billion baht.
Construction business generated 10% of Tasco's total revenue last year.