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Vietnam’s cement industry – an indepth overview

Vietnam’s cement industry – an indepth overview

Saturday 09, 04 2022
Compared to other building materials sectors in Vietnam, the cement industry is having a higher capacity with supply always greater than demand, putting pressure on manufacturers.

Industry overview

Currently, there are 90 cement production lines in Vietnam with a total capacity of 106.6 million tons/year. In fact, however, these lines can produce 122 million tons/year, which leads to the fact that cement market supply exceeds demand at a high level.

Vietnam’s cement industry

Despite difficulties and challenges, in 2021, Vietnam’s cement industry still successfully saw a higher growth rate than 2020. Total production output in 2021 was estimated at 103.21 million tons, up 1.4% compared to 2020. Consumption was about 105.26 million tons, up 2% compared to 2020. In particular, domestic consumption was about 62 million tons. Although the production output was equivalent to 2020, due to increasing costs of input materials and production fuels, companies in the industry did not record expected profit.

In the last 3 years, Vietnam’s exports of cement and clinker have reached over 30 million tons/year. In 2021 alone, the export of cement and clinker products was about 42-45 million tons, an increase of 19% compared to 2020; export value was estimated at 2.1 billion USD, marking the highest export figure ever.

Experts forecast that in 2022, domestic consumption of cement will increase again, but the gross profit margin of manufacturing enterprises will face great pressure due to the increase in production costs. In particular, the domestic coal price is expected to increase in 2022 due to higher coal production and mining costs.

Cost structure of cement production

In addition, competitive pressure will increase when new factories come into operation, causing excessive capacity.

However, the growth rate of the cement industry will depend on the control of the Covid-19 epidemic. Besides, the rapid urbanization rate and population growth of 0.9% per year will boost housing demand and consumption of building materials, including cement. According to estimates from CIC and Census 2019 data, in the period of 2019 - 2023, the total demand for new and replacement housing will be 691.7 thousand apartments, equivalent to 2.5% of the total housing demand in 2019.

Increasing disbursement of public investment and boosting construction investment projects are expected to be the solutions to promote domestic consumption. According to calculations, a 1% increase in public investment will increase GDP by 0.06%, many industries will benefit. In the period of 2022 - 2023, only cement companies will really benefit from infrastructure investment projects, after the works using public capital have completed site clearance.

public investment

Industry forecast

A fierce competition is taking place strongly in the cement market. Small businesses with outdated technology will be left behind in this fierce competition.

Sharing about the trend of the cement industry in the future, Dr. Nguyen Quang Cung - Chairman of the Vietnam Cement Association emphasized that the cement industry must adopt environmentally friendly production. In particular, companies must focus on low-carbon cement production, minimize dust concentration and utilize excess heat to generate electricity.

The second trend, according to the Chairman of the Vietnam Cement Association, is to use technological solutions to increase productivity, design capacity, additives, and reduce the use of clinker. The Chairman of the Vietnam Cement believes that the consumption of cement will increase. Cement consumption per capita will see a 30-40% increase, from 620 kg/capita to 1,000 kg/capita.

Source: baoxaydung, Vietnam Cement Association

Compiled by VietnamCredit

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