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CEMENT SECTOR TO EXPERIENCE OVERSUPPLY

Wednesday 20, 12 2017
It is expected that Vietnam’s cement surplus in 2017 could be 30 million tonnes and if the country does not export cement, the figure will be 35 million tonnes by 2020.
CEMENT SECTOR TO EXPERIENCE OVERSUPPLY
It is expected that Vietnam’s cement surplus in 2017 could be 30 million tonnes and if the country does not export cement, the figure will be 35 million tonnes by 2020.

According to the Chairman of Vietnam Cement Association (VNCA) – Nguyen Quang Cung, total designed capacity of the cement industry was 88 million tonnes in 2016 and it will reach 120-130 million tonnes by 2020. Domestic demand for cement by 2020, meanwhile, is predicted to be 82 million tonnes, resulting in a surplus of 36-37 million tonnes.

The association’s forecast showed that the country’s cement demand would be increased by 5-6 million tonnes per year. By the end of last year, the cement industry received a contributrion of 6.8 million tonnes from Song Lam Cement Plant’s first phase and Long Son Cement Plant. Five other cement projects are under construction and will be operated in 2020, supplementing 12.7 million tonnes to the sector.

Cung was quoted by the newspaper as saying that the cement oversupply was because the industry’s planning was backward. Real capacity turned out to be higher than what was estimated thanks to improvements in technologies.
In addition, export prices of cement and clinker have decreased due to fierce competition in the market. China’s cement surplus was 600-700 million tonnes which is 7-8 times higher than that of Viet Nam.

Moreover, big cement exporters including China, India and Pakistan have been on a race to lower export price, leading a decrease in Viet Nam’s cement exports, said Cung, adding that the VNCA proposed the Government work with other countries to reduce import taxes and support transport costs for building materials including cement.

Figures from VNCA revealed that cement consumption in the local market in the first 11 months of the year was 55.63 million tonnes, slightly increased by two per cent from the same period last year and meeting 87 per cent of the whole year’s target. Cement and clinker exports reported a year-on-year increase of 27 per cent in the January-November period.

The chairman said cement producers should be active in searching for export markets. Nguyen Tran Nam, chairman of Viet Nam Real Estate Association, shared the opinion that in addition to fierce competition from imported products, the building material market in 2018 would face challenges as there will not be many new real estate projects. He said consumption of many essential building materials such as cement, sand, brick and steels was slow in 2017.

Nam said Vietnamese producers of building materials should have suitable production plans while renewing technologies towards friendly environmental products. Firms were also asked to improve competitiveness by reducing prices and enhancing branding, he added.
Compiled by VietnamCredit


 
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