Vietnam: 2012 outlook remains cloudy

Vietnam: 2012 outlook remains cloudy
Published: 15 December 2011

By the end of 2010, Vietnam Cement Association had predicted that in 2011, there would be about 9Mt of cement to be added to the expected national cement production output. That’s when 10 new cement plants would be put into operation. Therefore, in 2011, the full year capacity could reach over 60Mt.

However, the statistics released by Vietnam Cement Corp (Vicem) showed that in the first nine months of 2011, the member companies under Vicem Corp have reported producing about 11Mt of clinker, over 12.3Mt of cement, and suffering loss of VND219bn (US$10.51m).

For the whole industry, Vietnam has produced and consumed about 35.27Mt, fulfilling 65.2 per cent of targeted year plan. Exports reached 3Mt of clinker and cement in the first three quarters.

It was predicted that the total cement production consumption would be about 50Mt in 2011, of which export volume would be about 4Mt

Nguyen Nam, deputy minister of construction explained the reasons for low business results in cement industry, in comparison with targeted plan was because of high input costs such as the surge in coal and oil price by over 40 percent and high lending ratio of about 20 percent per year from banks.

In 2012, Vietnam Cement Association forecasted that the whole country’s consumption may reach 55-56.5Mt of cement, with export volume of 4-4.5Mt. However, the cement industry would still face with difficulty due to increasing trend in input costs (such as electricity and coal price).

At present, Vietnam has over 100 cement plants to be put into operation with total designed capacity of over 60Mt; meanwhile the country’s demand was only over 50Mt. In addition, the stockpiled volume in cement sector was about 16.3Mt, to be left for consumption in 2012.

Predicting the difficulty that local cement industry may face, the ministry of construction has already issued documents to require some cement production joint ventures to export 100 percent of cement volume. However, it is a difficult task as the competitiveness of Vietnamese cement in the foreign markets is not at high position. Tran Van Huynh, chair of Building Material Association stated that it was necessary to halt issuing investment licences for the small-scale cement plants instead.

Source: Intellasia