Climbing over the cement wall

14:58 | 23/02/2017 Industry

(VEN) - According to the Ministry of Construction, 2017 is forecast to be another tough year for cement sales, especially cement exports. Businesses are therefore advised to prioritize exports in order to assure their stable development.  

Foreign competition

According to data compiled by the General Department of Vietnam Customs, Vietnam exported about 14.7 million tonnes of cement and clinker worth US561 million in 2016, down 7.1 percent in volume and 16 percent in value compared to 2015.

According to the Ministry of Industry and Trade, although Vietnam’s cement industry has become the biggest in Southeast Asia, with 58 cement plants producing almost 90 million tonnes per year, the country exported much less cement than Thailand.

Thai products are highly competitive thanks to their quality and fast delivery, and Thai businesses have long-term, good relations with trade partners.

Over the past two years, Chinese businesses have increased volume and decreased prices of cement exports. Although Vietnamese businesses reduced their prices, their products remained less competitive than Chinese products of the same kind in terms of price.

Domestic enterprises don’t have many long-term export contracts, while their market forecasts remain inadequate.

According to Vietnam National Cement Association Chairman Nguyen Quang Cung, domestic manufacturers are also facing growing production costs, making it even harder to compete with neighboring rivals. Export costs are expected to increase about US$4.5 per tonne of clinker, according to the FOB (free on board) price of US$30/tonne, and US$7.5 per tonne of cement (according to the FOB price of US$50/tonne) due to new regulations.

Promoting exports

Despite the host of difficulties, domestic businesses are focusing on finding ways to increase exports.

According to Hoang Manh Truong, Chairman of the Vissai Group, a leading cement producer and provider, the group is investing in increasing its bagged cement production and export capability, as well as export revenue.

Ha Tien Cement has plans to regain its “abandoned” market share in Cambodia, although the company’s sales in this market remain low. Leading exporters, including Thang Long and Cam Pha cement joint stock companies, said they have found more buyers for 2017.

To boost cement exports, state management authorities, including the Ministry of Industry and Trade and the Ministry of Construction, and the Vietnam National Cement Association, should closely cooperate to prepare a long-term, consistent cement export development strategy and increase consensus among manufacturers and exporters in order to improve product quality, open markets and considerably increase exports.

The Ministry of Construction will work with the Vietnam National Cement Association to find ways to increase cooperation

among businesses in cement export. Cement exporters, for their part, should improve their capability and professionalism,

and increase connectivity and cooperation for their export benefits and efficiency.

Lan Anh