VietNam Cement Industry is struggling to balance supply - demand

Monday  27/02/2023
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The current supply of cement has far exceeded the demand, but will continue to be added in 2023, causing the oversupply to widen further, while the forecast for cement consumption in the domestic market does not show any positive signs. These factors force the cement industry continue to struggle to balance supply - demand, regulate production - consumption to avoid increasing inventory.

 

In 2022, VietNam Cement Industry added two more cement production lines: Ocean Cement 1 (July 2022, capacity of 2.3 million tons/year); Long Son Cement 4 (September 2022, capacity 2.5 million tons/year). According to the approved plan, in 2023, two new cement production lines will be put into operation, including: Xuan Thanh Cement 3 (capacity 4.5 million tons/year), Long Thanh Cement (2.3 million tons/year). It is expected that the supply of cement will reach about 120.7 million tons totally, while the domestic demand for cement is forecasted at only 63-65.5 million tons.

Serious suplus of cement supply continues to lead to increasingly fierce competition in the context of cement producers facing pressure to consume products, many of them have to stop production lines or reduce production capacity. In early January, a number of cement production lines confirmed that they had to stop the kilns or combine equipment repair/ overhaul, and reduce the pressure on consumption when the domestic and export cement markets were still quiet.

In 2022, the total cement consumption in the domestic market reached 62.68 million tons, equivalent to that of 2021. Cement consumption slowed down due to the downward cycle of the real estate market, plus disbursement of investment capital for public works is still slow, making business performance of cement enterprises significantly affected.

Consumption of cement is low, while production costs are continuously increasing, making the profits of cement manufacturing enterprises continue to decelerate, especially those based in areas with many large capacity cement factories such as Thanh Hoa, Nghe An, Ha Nam, Ninh Binh. This scenario is forecasted to continue in 2023.

According to experts, the real estate market is forecasted to continue to face difficulties, when the capital flow has not been cleared, and the psychology of homebuyers is cautious ... making many real estate developers not dare to step up investment in new projects, but chose to focus on exploiting existing projects, extending construction schedules.

The market in 2023 has not been improved is also the opinion of the Vietnam Cement Corporation (VICEM), which holds 35% of the market share in VietNam domestic ement market. VICEM General Director, Mr. Le Nam Khanh said, civil construction recovery is slow; new projects were also slow to deploy, so cement was not easy to increase consumption.

                                                                                                                                     Source: ximang.vn

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