Vietnam’s modernising cement industry
Vietnam’s cement demand will grow robustly over the coming five-year period, with annual demand expected to exceed 80Mta by 2023, according to the Vietnam Country Report 2023, published today by ICR Research.
The transformation of Vietnam’s economic fortunes over the last 25 years has been one of the great success stories of southeast Asian development. Nowhere is this more apparent than in its built environment. Since 1990 cement demand has risen from just 3Mt to its level of 61Mt in 2017, making it the sixth-largest cement consumer worldwide.
Local cement demand continues to grow at a fast pace, with YoY demand for the first eight months of 2018 up nine per cent. Behind this growth lies a formidable appetite for residential construction, strong public works and booming tourism-related investments.
This rapid expansion of demand has been matched by a vigorous investment in domestic cement capacity, which has climbed to a hefty 118Mta and is mostly located in the limestone-rich northern regions. And this is where Vietnam faces a challenge – how to manage the supply-demand balance in such a way as to maintain a financially-viable and environmentally-sustainable industry.
The current solution is to export surplus capacity, an approach that has been very successful: over the 2010-17 period, Vietnam has exported over 100Mt of cement and clinker. This year it will again export a record volume of product, including a large quantity of clinker to Bangladesh and – of all places – China.
But future export demand is not guaranteed, given the accumulating regional surplus, making the country’s expanding surplus a source of concern. Therefore, Vietnam’s cement industry regulator, the Ministry of Construction, is in the process of drawing up long-term plans for the sector that will guide its development through to 2030.
This strategy will determine how much new cement capacity can be licensed for construction, install mechanisms and incentives for carbon reduction, impose tighter regulations for pollution control, and rationalise the structure of the industry. Central to this strategy will be the removal of obsolete or inefficient capacity as well as defining the future role of the Vietnam Cement Industry Corporation (Vicem), which is slated for a public listing and is likely to play an important role in consolidating the fragmented industry.
The next five years will be a crucial period for Vietnam’s cement industry as it continues to modernise and restructure in preparation for the next phase of its exciting development.
For a comprehensive data, analysis and forecasts of the Vietnam cement market, purchase ICR Research’s Vietnam Country Report 2023 – out now.
