Crisis of surplus of tens of millions of tons of cement

Statistics from the Vietnam Cement Association (VNCA) show that by 2016, the total designed capacity of the Vietnamese cement industry reached nearly 88 million tons/year. If we count the projects under investment, expected to be completed in 2018, the cement factories investing in technical and technological improvements, the actual production capacity by 2020 could reach 120-130 million tons.

Meanwhile, the forecast for domestic cement consumption by 2020 is about 82 million tons, meaning there will be a surplus of 36-47 million tons. VNCA data also records that domestic consumption demand is forecast to increase by 5-6 million tons per year from now until 2020, and by 2020, domestic cement consumption demand will be about 80-82 million tons.

It is known that at the end of 2016, there were 6.8 million tons of cement added from 2 new factories, Song Lam Cement Factory Phase I (capacity of 4.5 million tons) and Long Son Cement Factory (capacity of 2.3 million tons) to the total capacity of the cement industry. Thanh Thang Cement Project (capacity of 2.3 million tons) has also just been put into operation. Meanwhile, there are 5 projects under construction and will be put into operation between now and 2020, adding an additional supply of 12.7 million tons, bringing the total capacity to 101 million tons by 2020.

Another reason for the high increase in the cement industry's capacity compared to consumption demand is that the planned capacity is outdated. According to the previous calculation, to make 1 ton of cement, it is necessary to produce 0.8 tons of clinker plus 0.2 tons of additives (not included in the capacity of the kiln). But in reality, due to improved technology, to produce 1 ton of cement, only 0.6 tons of clinker and 0.4 tons of additives are needed. The planned capacity is the capacity for clinker products, so when technology is improved, the actual capacity is increased.

In the trend of international integration, the product consumption market is always a fierce competition. The ASEAN bloc opens up trade. The export price of cement and clinker has been and is falling very low, along with the excess capacity of Chinese cement reaching 600 - 700 million tons, the surplus is 7 - 8 times the total capacity of Vietnam at present. China, India, Pakistan and some other countries compete to lower export prices, occupying market share, causing Vietnam's export prices to continuously decrease. The Vietnam Cement Association proposed that the Government work with countries to reduce import taxes, implement transport agreements with some European countries, and support transportation costs for exported materials...

However, besides the desire for macro-level support policies, the dynamism and efforts of each enterprise will play a decisive role in survival.