Vietnam warned about cement oversupply, narrower export markets
As the domestic cement supply has exceeded demand, exporting products is the only solution for cement manufacturers.
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According to the Vietnam Cement Association (VNCA), the total designed cement capacity reached 88 million tons by 2016.
If counting the plants under construction and put into operation by 2018 and the one being upgraded, the real production capacity may reach 120-130 million tons by 2020.
Meanwhile, the cement consumption in the domestic market is estimated at 82 million only by 2020, which means the excess of 36-47 million tons.
Also according to VNCA, the domestic demand was 60 million in 2016, and the figure would increase by 5-6 million each year from now to 2020, i.e. the demand would be 80-82 million tons by 2020.
As such, the overabundance may begin in 2017 and the competition for domestic consumption will continue increasing.
Luong Duc Long, director of the Building Material Institute under the Ministry of Construction (MOC), confirmed that the supply is higher than the demand right now.
Meanwhile, five more cement plants are under construction and will become operational from now to 2020, which will provide 12.7 million tons a year more. The total cement output is expected to reach 101 million tons a year in the future.
“Agencies predicted that domestic demand would reach 95 million tons by that time. However, I think the figure would not be so high,” he said, adding that only 60 million tons were consumed last year and the demand would not soar so rapidly in the next four years.
Long said the cement oversupply has taken place already, but this still has not caused big consequences because manufacturers can sell cement abroad. However, he warned that exporting cement would be not an easy job in the future.
According to the General Department of Customs (GDC), in the first quarter of 2017, Vietnam exported 4.8 million tons of cement, an increase of 10% in quantity and 5.9% in value compared with the first quarter of 2016.
Cement is exported to 10 markets, mostly to the Philippines and Bangladesh, which consume 67.5% of total cement and clinker exports.
An official of VNCA said Vietnam was once listed among the world’s biggest cement exporters (20 million tons).
However, the export has been slowing down after 2014. Vietnam could only export 16.2 million tons in 2015, down by 18% from 2014. Meanwhile, the exports of cement and clinker in 2016 were lower by 2% than 2015.
Not only export volume, but the export price is also on the decrease because of competition from China, India and some other countries.
