Sales in Vietnam Could Drop to 52.5 Million Tons This Year

Builders say reduction in the number of construction projects likely catalyst, even as oversupply situation exists. (CW Group) Cement sales in Vietnam could drop to 52.5 million tons this year, according to a report of VN Economy News said. The Vietnam Cement Association said this is due to a reduction in the number of local building projects. This will be aggravated by oversupply throughout the industry, while local and export demand was sluggish, the association said. In the first seven months of the year, the cement industry had sold about 26 million tonnes, accounting for 45% of the predicted annual consumption of between 54.5 and 56 million tons. The country's cement industry has 110 production lines with a total designed capacity of 64 million tonnes annually. However, many plants do not yet run at full capacity. As a result, total production this year is expected to reach 57 million tons. The association added that there were 4 million to 5 million tons of stockpiled cement. To offset reduced local demand and the pressure of inflation, producers were looking to boost exports. However, export prices were low while transport costs were high, the association said. Similar problems last year meant the Viet Nam Cement Industry Corporation (Vicem) failed to reach its export target of 1 million tonnes. Le Van Chung, chairman of Vicem, said competition among producers would become more intense when production increased, addingthat Vicem planned to open seven cement plants in the near future. He also said investment in cement projects was normally in hard currencies, which meant repayment of high-interest loans would be a financial burden on producers. He said a number of firms were likely to either default on payments or be forced into mergers. Source: cemweek.com