Cement sector targets domestic sales

09:42 | 01/06/2017 Trade

(VEN) - Cement output and sales slightly increased in the first quarter of this year. However, experts predicted that from now until the year’s end, cement businesses will face numerous difficulties in selling, especially in exporting, due to oversupply and fierce competition.

Cement exporters are paying greater attention to promoting domestic sales

Data from the Ministry of
Construction show that Vietnam
exported 4.82 million tonnes of
cement and clinker in the first quarter
of this year, earning US$168.65 million,
up 11 percent in volume and 6.4 percent
in value compared with the same period
in 2016. According to the Vietnam
Cement Association, however, cement
and clinker producers and exporters are
facing numerous difficulties because
export costs have increased strongly.

According to Vietnam Cement
Association President Nguyen Quang
Cung, after a period of accelerated
development, the Chinese market faced
redundant supply of about 670 million
tonnes of cement, requiring Vietnamese
cement exporters to compete more
fiercely on price. This directly affects
the production plans of cement
businesses. Exports to traditional
markets, such as the Philippines and Bangladesh, have also faced difficulties due to fierce price competition.

Some ASEAN member countries are promoting cement production. Indonesia, for example, used to import cement and clinker from Vietnam, but now it has become an exporter of these products. Starting this year, Indonesia will export more than three million tonnes of cement and clinker annually.

According to the Ministry of Construction, cement businesses sold 12.91 million tonnes in the home market in the first quarter of this year, a rise of four percent compared with the same period in 2016. Of this total, 4.59 million tonnes were sold by the
Vietnam Cement Industry Corporation; 3.80 million tonnes by joint-venture companies; and 4.52 million tonnes by local businesses.

A representative of the Ministry of Construction’s Building Materials Department said domestic sales of cement are predicted to increase in May due to higher demand. According to this official, the Ministry of Construction will coordinate with other ministries, sectors and localities to promote the use of cement products in building public works in order to boost domestic sales. To reduce competition pressures and maintain the balance between supply and demand, new cement plants will not
be built from 2018.

In the opinion of Nguyen Quang Cung, in the context of exports facing difficulties, promoting domestic sales should be prioritized, after which product competitiveness should be enhanced to boost exports in the long term. “Cement plants located
near seaports having high capacity and abundant material resources and using modern technologies should concentrate on boosting exports,” he said. “Meanwhile, other plants should pay greater attention to promoting domestic sales”.

To stabilize the cement market, the Ministry of Construction has coordinated with the Vietnam Cement Association to provide

guidance for cement businesses nationwide to improve their sales networks and reduce circulation costs.

 

Lan Anh