This is due to the growth rate of real construction value of residential and non-residential projects is expected to reach 7.9% in 2021, 1.7% higher than the growth rate of 6.2% estimated for 2020.
In particular, the COVID-19 epidemic is expected to be controlled thanks to vaccine coverage, which will make economic activities more exciting. Besides, rapid urbanization rate (expected urbanization rate to reach about 38.5% in 2020, an increase of 1.16 percentage points compared to 2019) and population growth of 0.9% per year, will boost demand for construction materials.
According to estimates from CIC and Census 2019 data, in the period of 2019-2023, the total demand for new and replacement housing will be at 691.7 thousand apartments, equivalent to 2.5% of the total housing demand of the whole country in 2019.
For each industry group, VIRAC analyzed: steel industry group, for example, construction steel price increased sharply in 2021, started to slow down in the third quarter but still remained at a high level due to the influence of rising raw material prices. Input materials include: iron ore, scrap steel, coking coal, graphite electrode... are all at high prices.
In addition, domestic steel prices are also affected by the increasing trend of world steel prices: The increased import demand for iron and steel from China pushed the increase of global iron and steel prices. In addition, in Europe and the US, the shortage of iron and steel supply due to the impact of the COVID-19 epidemic and the prolonged delivery time of input materials for production are also the main reasons for the iron and steel prices to increase.
However, currently, domestic construction steel production is assessed to meet domestic demand. Construction steel production capacity in 2021 increased rapidly with a number of steel projects having come into operation such as Hoa Phat Dung Quat Iron and Steel Complex Project of Hoa Phat Group, Nghi Son Steel Plant Project, the production capacity of construction steel is currently about 14 million tons.
The proportion of domestic consumption still accounts for the dominant proportion, often over 90% because of low value but bulky products that are not favorable for export activities. The steel pipe market is relatively concentrated, in the hands of two giants Hoa Phat (30.41%) and Hoa Sen (20.66%).
For cement, VIRAC forecasted that exports of clinker and cement in the first 9 months of 2021 would grow by 19% over the same period in volume, growing strongly again since the third quarter of 2021.
However, according to VIRAC assessment, Vietnam's clinker and cement exports would continue to grow in the following months in the context of high Chinese demand and tight domestic supply due to environment protectionist policies and it is expected that China's power crisis would be resolved after the fourth quarter of 2021, forcing this market to look for outside resources.
The export of cement and clinker is under the control of the Government when subject to a limit on the export ceiling: only 30-35% of total production. Some difficulties of cement export have been seen as many markets under strong competitive pressure from Vietnam cement have increased safeguard tax to protect the development of the domestic cement industry, including Philippines (applying an import tax of about 5% of the selling price) or Bangladesh (applying an additional 8% of VAT from 15% to 23%).
This may create a tendency to impose tariffs in many other export markets of Vietnam such as China, Bangladesh, and Africa.
However, the price of cement in the three regions is not too volatile, mainly affecting the high cost of input factors such as coal price, electricity price, labor cost... However, the increase of new factories has restrained the growth rate of these products.
The current cement price is still different by region, the price of cement in the South is at a relatively high level. This is also an area of shortage of supply when there are only 8 cement factories here with a capacity of 11.9 million tons while the demand for cement is also up to more than 23.61 million tons.
However, it is forecasted that in the context of increasing input prices, the price of cement in the region is likely to keep its selling price due to the fact that there is no difference in cement products, the level of industry competition is pretty high.