Vietnam cement producers struggle to boost exports

Vietnam cement producers struggle to boost exports
Published: 05 October 2011

Vietnam reaped US$156.39m from cement exports in the first eight months of this year, fulfilling 46.2% of the country’s whole year target, the Ministry of Construction said. The ministry had earlier requested cement companies, including Chinfon Cement Corporation, Nghi Son Cement Corporation and Phuc Son Cement Company, to seek more export markets for their output amid the country’s cement glut. However, Vietnam’s cement producers attribute their difficulties in boosting exports to lack of competitiveness and poor infrastructure as well as high transport costs.

Competition in South East Asia and South Asia, their targeted export markets, is fierce as Thailand, China, Indonesia and Taiwan are pushing their product in these markets. Moreover, Vietnam’s new production lines have not been subject to amortisation yet, unlike those of their competitors, leaving cement producers in the country with higher production costs. The additional fact that Vietnamese cement producers have to pay high interest rates at 20-21% while the interest rates in regional countries are much lower further erodes competitiveness.

Poor infrastructure also works against Vietnam’s cement industry as cement exports to faraway markets require large vessels with a minimum tonnage of 50,000t. However, Vietnam does not have any ports capable of receiving vessels of this type and companies have to use lighters to carry cement to places of anchorage. “It will take at least one month to load 50,000t of cement into ships if using this way. It will take one month more to ship cement to Africa, and then one more month to carry cement from ships to construction sites,” director of a cement company said, noting that cement products can be used just within six months after the manufacturing date.