Vietnam market stabilisation measures

Vietnam market stabilisation measures
Published: 06 November 2006

The Vietnamese cement market was seeing good signals, but also many shortcomings, the Ministry of Construction said following a meeting with cement companies from the south. The meeting was held to discuss plans to sell cement, and measures to stabilise the cement market in the southern region in the fourth quarter.

The cement sector was on track to produce and sell a total of 31.5 million-32.5Mt of cement this year, up 9 per cent on last year, according to the ministry. Cement prices had been adjusted many times due to fluctuations in petrol and imported clinker prices. However, the sector had still been keeping control of cement prices, even in months of high demand, the ministry said.

The ministry estimated that Vietnam would need about 9-9.5Mt of cement and 1.5Mt of clinker in the fourth quarter of this year, based on actual quantities sold in 2005 and in the first nine months of this year. It also surmised that demand for cement and clinker in the south would be 1.2-1.5Mt.

According to the ministry’s calculations, Vietnam would have an excess of 5-10Mt of cement in the 2009-13 period due to a larger number of factories. The country would no longer import clinker from overseas from this period.

The ministry suggested that enterprises build their own strategies and immediately seek out more markets for export.

Some enterprises had a different view of cement production in the south. Demand for cement would go up sharply (10-14 per cent) following the new wave of investment into industrial zones, and the boom of high-grade buildings for rent in the region when Vietnam joins the World Trade Organisation, they said.

At the meeting, the issue of cement quality and prices caused a lot of controversy. The quality of clinker supplied by Hoang Thach and Phuc Son factories was much lower than that of clinker imported from Thailand due to a lower content of additive, said a representative of Ha Tien 1 Cement Company.

Enterprises also mentioned the price of Phuc Son cement, which was the cheapest in the cement market. The dumping of Phuc Son cement was an unfair action and might lead to a war in cement prices, they said. Deputy general director of Lafarge joint venture Nguyen Ngoc Lan said the cost of transportation was a hot issue.

Lafarge had built a factory in Nhon Trach-Dong Nai, with all materials and products carried by ships. High fuel prices made transportation costly, so the company could not lower their prices, Lan said.

Cement retail prices among famous brand names in the south like Ha Tien 1, Ha Tien 2, Holcim and Nghi Son, which ranged from VND960,000 to VND1,020,000 per tonne (US$60-$64 per tonne), were still at high level compared with those of other countries in the region.

Some enterprises suggested that the Ministry of Finance consider reducing the import duty on clinker to 0-3 per cent. bThe Ministry of Finance disagreed, explaining that cutting taxes suddenly would cause a flood of budget clinker from neighbouring countries into Vietnam.