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Exports to ease cement surplus
Plans by cement producers to ease a surplus in the domestic market by ramping up exports of cement may be difficult to carry out, according to several experts from the sector.
General Director of the Cement Finance Company (CFC) Bui Hong Minh said that while expanding exports might in part help ease the cement surplus, securing new markets for Vietnamese cement would be a difficult task.
"Exporters have to pay considerable costs for intermediaries, thus pushing prices higher," said Minh.
The Viet Nam Cement Industry Corporation (Vicem), the country's largest cement producer, has set an ambitious target of exporting 1 million tonnes of cement this year.
Figures from the General Statistics Office show that during March, the country produced 4.09 million tonnes of cement. Cement production figures for the first quarter of the year hit 11.13 million tonnes, 1,15 million tonnes more than the same period last year. Demand increased by 6.4 per cent against the same period last year, reaching 10.27 million tonnes, meeting 20 per cent of Vicem's target.
The country now has 105 production lines with annual capacity of over 61 million tonnes. However, domestic demand this year is expected to be between 48 and 50 million tonnes, resulting in a huge surplus.
In an effort to ease the situation, the Government has asked contractors to focus on using cement in rural transport construction projects.
However, Chairman of the Viet Nam Construction Materials Association Tran Van Huynh said the programme aimed at maximising use of cement in transport projects had not been implemented effectively.
Programmes to expand exports have had several successes. In 2008, Vietnamese cement producers expanded their market share in neighbouring countries such as Cambodia, Laos and China. However, the volume of exports to these countries is still at a modest level.
Some Vietnamese cement firms have sought to expand exports in major markets such as Africa, the EU and the US, but few had successes.
Vinaconex's Cam Pha Cement Company has exported 12,500 tonnes to Africa and signed a contract to ship 40,000 tonnes per month to South Africa and neighbouring areas.
Ha Tinh Cement Company has exported 16,000 tonnes of cement to Cambodia so far this year, while Hoang Mai Cement Company is hoping to expand exports to Africa and the Middle East.
However, Vietnamese cement producers competing with regional producers in distant markets have to spend more on transportation costs, which can limit the competitiveness of their products.
Huynh said Vicem would find it difficult to reach their target of 1 million tonnes of cement exports this year as cement companies had paid little attention to foreign markets.
Other industry experts said domestic cement businesses faced a tough task in trying to gain a foothold in major markets such as the US and EU as these countries, with extensive high-tech infrastructure already in place, have lower demand for cement while also setting high quality standards that many Vietnamese cement firms might not be able to satisfy.
Africa and developing countries with poor infrastructure presented more potential for Vietnamese exporters, they said.
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