However, the industry still faces numerous obstacles, requiring the active coordination and rational adjustment among agencies towards sustainable and stable development.
An increase of 12% in consumption
According to the Department of Building Materials under the Ministry of Construction, Vietnam has now 82 cement production lines with a total designed capacity of over 90 million tonnes. Cement consumption in 2018 reached over 95 million tonnes, a year-on-year increase of 12%. Remarkably, consumption of cement products in the domestic market was over 65 million tonnes, up 10%. Meanwhile, the country exported around 30 million tonnes of products (increase of 50% compared to the previous year), earning over US$1 billion.
General Director of Vietnam Cement Industry Corporation (VICEM), Bui Hong Minh, said that in spite of the advantages, such as stable economics, high growth of the construction sector and many Chinese cement production lines closing down due to pollution, Vietnam’s cement industry had to face numerous difficulties. The domestic market is quite tense with the fierce competition from cheap cement brands. The power prices both in the country and around the world increased, particularly the coal price went up twice in the past year. Domestic coal resources are limited, while the import of coal at cement enterprises is complicated, therefore, many of VICEM’s companies had to look after coals every day, particularly in the rainy season.
The US-China trade war has also affected many import-related fields, including transport, coal prices, foreign exchange rates and bank interests. However, VICEM’s production and consumption have achieved positive steps. The efficiency of the corporation’s lines increased 10% compared to the designed capacity, while its consumption reached 29.3 tonnes and the inventory was only around 10 days of production, equivalent to 900,000 tonnes.
It is expected that there will be two more cement production lines, bringing the total lines to 84 with a total capacity of around 102 million tonnes. Compared to the Prime Minister’s Decision No.1488/QD-TTg on ratifying the cement industry development plan in Vietnam for the 2011-2020 period with a vision to 2030, the investment for cement production has been reduced to 26 lines, decreasing by 18.96 million tonnes. This figure showed that the cement market has arranged itself to operate more stably, so the situation of supply exceeding demand has basically been controlled.
Since 2012, annual cement consumption has increased from 5%-10% and the average industry productivity reached 86% of the designed capacity. Capacity, production costs and consumption markets of different factories will lead to intense competition, therefore, the sector should make rational adjustments in order to survive and develop.
Cement production is one of the major industries with high energy consumption. The prices of several materials and fuels, including coal and power, are expected to increase, which will directly affect the cost and efficiency of cement plants. It is urgent to find solutions to save power costs to ensure sustainable development. In addition, the real estate market and slow-moving public investment projects are also factors in need of being calculated to plan development strategies for the cement industry.
VICEM General Director, Bui Hong Minh, said that the corporation has set synchronous measures to ensure its growth, including solutions to reduce costs (notably power costs), ensure the efficiency of existing lines, improve working productivity and promote investment to expand production capacity. The corporation also paid much attention to environmental protection, towards meeting European environmental standards as well as the enhancement of the use of ash and slag from thermal power plants into cement production and energy saving through pilot waste incineration for kilns. Regarding exports, VICEM steadfastly pursues the strategy of exporting mainly cement and limiting the exports of clinker to enhance the optimal efficiency.
According to Chairman of Vietnam Cement Association, Nguyen Quang Cung, cement enterprises should continue to set out appropriate measures to respond to market fluctuations, including difficulties in coal supply and the increase of electricity prices. In addition, the Philippines – the biggest importer of Vietnam’s cement products can apply safeguard measures, which will affect the business situation and regulation in consumption.
The Ministry of Construction will coordinate with the cement industry in the implementation of the cement industry development plan in Vietnam for the 2021-2030 period with the orientation to 2050 once it is approved. Accordingly, the development of large capacity lines (around 5,000 tonnes per day) will be the priority to maximise the efficiency of the plants. With the rapid growth of the country’s economy, works and projects are expected to be developed, bringing about the stable development of the cement industry.