HANOI: Three cement plants under construction will add an estimated 8.3 million tonnes to the industry’s total output by 2018, intensifying pressure on prices amidst stagnant demand.
While investors in new cement projects said they could find markets for most of their output, a representative from the Viet Nam Cement Association worried that competition in selling cement products would grow more intense due to soaring supply throughout the industry, which is already struggling with large inventories.
The three new cement plants are Tan Thang Plant, with an annual capacity of 2 million tonnes of cement and Song Lam Plant in central Nghe An Province, with a 4-million-tonne expected capacity for the 2015-17 period; and Thanh Thang Plant, with a 2.3-million-tonne cement capacity in northern Ha Nam Province. The new plants were expected to be operational in 2017 or at the beginning of 2018, at the latest.
Director of Tan Thang Cement Joint Stock Company Nguyen Cao Dien was quoted by Dau Tu (Investment) newspaper as saying that the cement industry had seen new investments after years of struggling with supply exceeding demand, with many plants incurring losses.
He also said thorough market research had been conducted before making investment decisions to ensure sales would be adequate, adding that there should be little concern about consumption.
Still, the association is worried that the industry will continue struggling to sell cement due to the rising supply and fierce competition with giant cement exporters, such as China, Thailand and Indonesia.There are some 100 cement plants in the country, with a total capacity of 60 million tonnes per year.
In August last year, Viet Nam removed five cement plant projects from the industry plan for the 2011-20 period and delayed construction of nine others.
In the first nine months of this year, cement sales totalled more than 52 million tonnes, roughly equal to the same period last year, and 73 per cent of the full year’s target, according to the Ministry of Construction’s Department of Building Materials. Viet Nam exported 11.85 million tonnes of cement in the nine-month period, only equivalent to 88 per cent of the same period last year.
Although export was considered a solution for the struggling cement industry, it was not easy to expand cement exports due to competition from China – the world leading cement producer, accounting for 60 per cent of the world’s total output. A report on Viet Nam’s cement industry by Stoxplus pointed out that the industry lacked a long-term export strategy.