Vietnam: demand for cement and steel to increase

Vietnam: demand for cement and steel to increase
Published: 20 October 2009

The demand for cement, steel and other construction materials will surge sharply in the fourth quarter, but prices will remain unchanged or even drop, forecast industry insiders.

The Vietnam Cement Association had previously warned that cement producers might lift prices due to a 25 per cent hike in the cost of coal, a main fuel for the industry. But, so far, cement prices have remained stable.

Vietnam Cement Corporation deputy director Tran Viet Thang said that cement producers may hold the line on prices since cement supplies were currently about 3Mtin excess of demand, a surplus that could reach 5Mt by the end of the year.

The trend should continue through next year as new cement plants come on line, he said.

The corporation was predicting that cement consumption this year would increase by only roughly 4-5 per cent over last year, Thang said, so no single producer was willing to risk pushing up prices without an agreement on the issue among all cement producers.

Vietnam Steel Assciation chairman Pham Chi Cuong was also predicting a sharp rise in demand for steel in the late months of the year but said prices were not likely to increase.

Cuong said that the cost of pig iron on the world market had fallen from US$530 to $480-500/t as many pig iron producers around the world, including China, Thailand and Malaysia, were facing a surplus.

The nation used more than 3Mt of steel in the first nine months of the year, up 29 per cent over the same period last year.

Nevertheless, the Vietnam Steel Corporation last week announced a price decrease of VND200,000/t to VND11.32m (US$665.88) for steel coil, and other producers were expected to follow suit.

In the ceramic fixtures and tile industry, the Viet Nam Building Ceramic Association (Vibica) estimated that the industry’s estimated output of 6 million units would outstrip demand of just 5m units.

The industry was expected to produce 261Mm2 of tile this year, while export demand was expected to fall by about 30 per cent to just 150Mm2, Vibica said.