A production line at Lam Thach Cement Factory in Quang Ninh Province. Several planned cement production projects could be cut to ensure production does not exceed demand. — VNA/VNS Photo Nguyen Dan
The Viet Nam Construction Materials Association has suggested the Government and Ministry of Construction review the list of cement production projects being developed and remove some in order to move more in line with market demand.
The association recommended the cancellation of nine planned cement production plants scheduled to be developed between 2016 and 2030, and reconsideration over six others which have been licensed in the central provinces of Binh Phuoc, Quang Binh, Nghe An and Thua Thien-Hue. These plants have been continually delayed due to weak investor financial capacity.
According to the association, due to economic difficulties, domestic demand for cement during the 2011 – 2013 period has decreased by around 14-15 million compared with what was targeted in a long term plan drawn up two years ago. Despite this, new cement production plants have continued to be developed.
The association said that by 2015 the total cement output of the country would reach 94.24 million tonnes, resulting in a 25 million tonne excess. The redundant figure would rise to 40 million tonnes by 2020 when the sector's total output hits 129.5 million tonnes.
The association's chairman Tran Van Huynh said 2012 was a stormy year for cement businesses and the situation does not look set to improve. He warned that if no drastic changes are made, more Vietnamese cement companies will face the prospect of bankruptcy.
La Hien Cement Joint Stock Company in Thai Nguyen produced and consumed 724,000 tonnes of cement and clinker last year, with total sales of VND645 billion (US$30.7 million), just only 85.6 per cent of the expected amount.
This year, the company only targeted the production and consumption of 750,000 tonnes and around VND693 billion ($33 million) in turnover.
According to their director Nguyen Van Dung, the low demand for cement along with the appearance of new brands has meant that businesses have been forced to reduce prices to remain competitive. Significant losses have therefore followed.
Big firms like Viet Nam Cement Industry Coporation (Vicem) have also struggled.
Vicem expected to produce 19-20 million tonnes of cement this year, and for their profit to reach VND500 billion ($23.8 million).
In comparison, last year they produced 20.5 million tonnesand made a profit of VND661 billion (31.5 million). — VNS