VNCA calls for government intervention in Vietnam cement industry

The Vietnam National Cement Association (VNCA) has reported that the country’s cement sector is in crisis, as a number of major players are at risk of bankruptcy or foreign acquisition, due to low production and consumption levels.

Despite the country’s 61 cement production facilities having a capacity of approximately 117Mta, total consumption was only 87.8Mt in 2023, including a domestic demand of 56.6Mt.

The association said, “Domestic cement consumption plummeted by 16 per cent in 2023 compared to the previous year. This slowdown is squeezing the cement industry, raising the risk of bankruptcies and fire sales to foreign firms.”

The drastic fall in consumption has resulted in an overabundance of inventory, resulting in many plants having to reduce capacity or stop production. 

The root cause of the decline in the sector is weak domestic demand, as infrastructure projects in the country are using traditional building technologies that require less cement. In addition, rising fuel and energy prices have caused a spike in production costs and this has been exacerbated by an increase in export duty on clinker from five to ten per cent.

The VNCA has appealed to the country’s prime minister for intervention. The association is calling for infrastructure investment and the abolition of the export duty on clinker, with the aim of increasing domestic consumption. It has also called for banks to help cement business through debt restructuring programmes.