Domestic cement companies would face stiffer competition in consumption in markets at home and abroad in the future, experts said. In 2013 and 2014, it was a difficult period for all domestic producers as well as the local cement industry due to the impact of the frozen domestic real estate market.
After a decade of severe shortage of cement, the situation in which cement plants run over design capacity and have to import from Thailand, domestic production balanced with domestic consumption for the first time in 2009. However, the imbalance between supply and demand became more serious since 2011 along with the decline of the economy. Due to oversupply, many cement plants had to boost export activities to cover the repair cost. However, the excess capacity happened in the North and Central regions while HCMC encountered severe cement shortage. In addition, Decision 1488 / QD-TTg dated 08/29/2011 of the overall plan for Vietnam’s cement industry was developed at the right time when cement consumption was increasing rapidly. According to this master plan, Vietnam would have a total of 130 cement plants and grinding stations in 2013 with a total capacity of 144MTPY. At that time, the government expected demand for cement to reach 93-95MTPY in 2020, and 113-115MTPY in 2030.
Domestic cement companies anticipate stiffer competition at home and in foreign markets.
(Hai Phong Cement Company)
According to Vietnam Cement Report published by Vietnam Industry Research and Consultant, Vietnam cement market continued to oversupply with the domestic consumption of 64% in 2015, excluding exports volume. The cement industry in Vietnam also witnessed the recovery of domestic market as well as the export of clinker and cement, with a slight increase of 2.38% in total consumption (much lower than the 11.41% increase in 2014). The largest export market of Vietnamese cement was Bangladesh, but Vietnamese clinker exports to Bangladesh in 2015 also dropped by 30 per cent against 2014.
Viet Nam has the largest cement industry in the ASEAN with 58 cement factories and a total capacity of 82 million ton of cement per year. Thailand has 11 cement factories with a total annual capacity at 46.7 million tones. However, Thailand has exported an average 34 million ton of cement per year, while Viet Nam had a record export volume of 21 million ton of cement in 2014, 13 million lower than Thailand’s volume.
In addition, Thailand’s cement entered the world market long time before Việt Nam, which started exporting cement and clinker from 2010 after many years of importing cement. Therefore, Việt Nam’s cement producers have still had a poor experience in exporting cement and attracting foreign importers.
More advantages of Thailand’s cement products on the world market include quality and quicker transport. Foreign importers have also preferred traditional partners such as Thailand, they said.
Logistics is still a weakness of Vietnam cement enterprises. Due to the over supply of clinker in the North and Central along with the shortage in the South, the major route of cement transporting is from the North and Central to grindding stations, which located along rivers and able to recieved goods via ocean-shipping from ports, in the South. However, the logistics for cement and clinker transportation. Thus, stations cannot handle vessels (20,000 tons or more). As a result, production cost of cement in the South usually is VND400,000 / ton higher than that in the North. In addition, Vietnam cement enterprises has export with FOB contracts, causing the loss of competitive advantage compared to other regional countries such as Thailand and China.
