Cement sector targets domestic sales

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.

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”.

Lan Anh / VEN