Vietnam: Thai acquisitions face tough competition

Vietnam: Thai acquisitions face tough competition
15 March 2017

Thai companies have spent around US$600m acquiring assets in Vietnam even as the country’s cement producers face shrinking export markets and tougher domestic competition, Vietnam Net reports.

At the end of February, LafargeHolcim completed the sale of its 65 per cent stake in its Vietnamese subsidiary to Siam City Cement (SCC) for at least US$550m. With the purchase, SCC now has 6.1Mta of capacity and a 20 per cent market share in southern Vietnam.

Siam City’s domestic rival Siam Cement Group (SCG) announced this week that it was to spend US$156m on purchasing shares in Vietnam Construction Materials. This gives SCG a 100 per cent stake in the Vietnamese producer with a domestic capacity of 3.1Mta – a figure which the Thai firm believes could be increased by efficiency improvements.

While these purchases suggest confidence in the future of Vietnam’s cement industry, Vietnam Net points to overcapacity and rising difficulties facing exporters to argue that the future might not be so rosy. Domestic capacity is set to rise to 120-130Mta by 2020, while demand is forecast to reach 82-93Mt by that date.

A new five per cent tax on cement exports is also pushing up the international price of Vietnamese cement, even as producers in other markets cut prices in the face of growing competition. This has pushed many Vietnamese producers into debt, including Vicem.

Published under Cement News