Too much cement, not enough exports

11:20 | 07/08/2017 Trade

(VEN) - According to the Vietnam National Cement Association (VNCA), the Vietnamese cement industry’s current production capacity is 86 million tonnes per year, while domestic consumption is estimated at 60 million tonnes this year. Therefore, the remaining 26 million tonnes of cement have to rely on exports, which are becoming increasingly more difficult as the imposition of five percent export duty has prevented local cement firms from promoting exports of their clinker and cement.  

Large inventory, slow consumption

A VNCA report shows that total domestic cement consumption in May 2017 reached 5.28 million tonnes, a drop of 10 percent compared to the previous month, and seven percent compared to the same month last year. This is due to the increased number of cement producers. Luong Quang Khai, chairman of the board of the Vietnam Cement Industry Corporation (Vicem), says the corporation currently owns eight affiliates, and has two new members – the Song Thao Cement Joint Stock Company and Ha Long Cement Joint Stock Company. Vicem is making greater efforts to promote sales in the face of cement and clinker inventories reaching about 1.4 million tonnes by May 2017, equivalent to more than 30 days of production.

“According to Vicem’s calculations, the best inventory condition is 20 days of production, which are equivalent to 800,000 to one million tonnes of cement and clinker in order to cover the problems with machinery. Therefore, cement and clinker inventories of about 1.4 million tonnes are very worrying,” Luong Quang Khai said.

Finding ways to export

Cement exports have maintained growth since the beginning of the year and are thus viewed as a key solution to reducing the cement inventory.

According to the General Department of Vietnam Customs, in the first five months of 2017, cement and clinker exports reached 8.2 million tonnes valued at US$288 million. Bangladesh was still the largest clinker and cement export market for Vietnam, with 3.5 million tonnes for US$103 million, followed by the Philippines with 2.2 million tonnes for US$96.2 million, Peru with 241,000 tonnes for US$11.2 million and Chinese Taipei with 349,000 tonnes for US$10.3 million.

But last year cement and clinker exports totaled 14.7 million tonnes worth US$561 million, down 7.1 percent and 16 percent respectively against 2015.

Nguyen Quang Cung, chairman of VNCA, said enterprises should pay more attention to promoting technology innovation and improving competitiveness of products. In addition, cement enterprises must be more professional in their operation.

The Ministry of Construction is also concentrating on coordinating with VNCA to work out suitable measures to enhance capability and professionalism, and promote exports.

VNCA forecasts that domestic cement consumption will reach about 82 million tonnes by 2020.

Lan Anh