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Apr 01, 2018 / 15:37

Cement producers post strong export growth

Vietnamese cement and clinker producers in March accelerated by 30 percent against the same period last year to roughly 2.4 million tons, the Ministry of Construction reported.

The rise brought the export value of the product to 7.5 million tons in the first three months of the year, up 28 percent year-on-year.
Industry insiders attributed the surge to higher demands in China, where cement production has temporarily stopped.
 
Vietnam’s cement and clinker currently exports to 12 countries and territories
Vietnam’s cement and clinker currently exports to 12 countries and territories
Vietnam’s cement and clinker currently exports to 12 countries and territories, of which Southeast Asia accounts for nearly 30 percent.
Chairman of the Vietnam Cement Association Nguyen Quang Cung predicted that Vietnam’s cement export prospect is positive this year.
According to Cung, Vietnam can export better this year in the wake of China’s policies related the development of its construction material industry, such as cutting outputs, increasing salary for workers and rising prices of the products.
Besides, the Vietnamese government’s policies on export tax exemption and VAT refunds applied for cement from February this year will also help the country’s product to be more competitive, Cung said.
Last year, the Ministry of Planning and Investment proposed export tax cuts on cement while local producers are struggling with high stockpiles as supply has exceeded demand in the domestic market.
In a report submitted to the government, the ministry said that the export tax rate of 5 percent on cement was too high, which undermined competitiveness of Vietnamese cement in the global market. Besides, cement was not eligible for input value added tax deduction, the ministry said.
The ministry estimated that the incentive policies will help prices of cement and clinker reduce by $12 per ton, adding that this expected to make Vietnamese cement to be able to compete against products from China, Thailand, Indonesia and Japan.
According to the Ministry of Construction, in the local market, cement supply exceeded demand by around 20 percent, putting local producers into a lot of difficulties.
Chairman Cung said that total designed capacity of the cement industry was 80 million tonnes per year in 2017. The country’s total cement capacity would reach 120-130 million tonnes by 2020.
Meanwhile, domestic cement demand by 2020 was expected to be 82 million tonnes, leading to a surplus 36-47 million tonnes.
The association’s forecast showed that the country’s cement demand would be increased by 5-6 million tonnes per year.
Cung said that the cement oversupply was because the industry’s planning was backward. Real capacity turned out to be higher than what was estimated thanks to improvements in technologies.
According to Le Van Toi, Director of the Building Material Department under the construction ministry, no more cement production lines would be put into operation from 2018 and cement companies must have appropriate production and sales plans to avoid creating more pressure on the local market.
Dinh Trong Thinh from the Academy of Finance said that exporting cement was just a temporary solution. Vietnam aimed to reduce exports of natural resources while the local cement industry was still using old technologies with high production cost, he said.
Exporting cement is a difficult problem. Only producers with modern technologies can export and compete, Thinh said.
Vietnam exported 18 million tons of cement and clinker last year, up 20 percent against the previous year. The country targeted to export more than 18 million tons this year.
Vietnam currently has 82 cement production lines with total designed output of 97.64 million tons.