Vietnam cement producers are struggling to find new export markets as they seek to sell excess cement volumes.
At the end of 2010, Vietnam had exported nearly 1Mt of cement and clinker by the Vietnam Cement Corporation (Vicem) and Vissai Ninh Binh. In the first eight months of the year, Vietnam exported 2.8Mt of cement and clinker, the highest ever level in the history. Vissai Ninh Binh and Vicem remain the two biggest exporters. Despite the encouraging initial achievements, Vicem’s subsidiaries still believe that exporting cement is an impossible mission.
“The biggest obstacle for Vietnam’s cement products is not the lack of the export markets, but is the lack of competitiveness and the good infrastructure conditions,” director of a cement company said.
The biggest problem for cement exporters is high transport fees. The most ideal export markets for Vietnamese cement products are Southeast Asian and South Asian countries, allowing for minimised freight costs. However, these countries are also the targeted by other producers in the region including Thailand, China, Indonesia and Taiwan.
Vietnamese products are also at a disadvantage because producers have to pay interest rates of 20-21 per cent. Meanwhile, the interest rates in regional countries are just several per cent.
In the first eight months of 2011, Vissai Ninh Binh exported 1.2Mt of clinker to Bangladesh through a Hong Kong’s company. Meanwhile, Vicem tried to bring cement and clinkers to neighboring countries of Laos and Cambodia. To compete with Thai products, Vietnamese enterprises have to export cement at the low price of US$55/t, or just equal to 60-65 percent of the domestic retail prices.
Furthermore, while the Middle East, Africa and North America markets offer some potential, only tens of thousands of tons have been exported from Vietnam due to shipping and port constraints.