Cement sector looks set to continue growth
The prospects of cement enterprises in the second half of the year will continue to improve, especially during the construction season at the end of the year, according to Chairman of the Vietnam Cement Association (VNCA) Nguyen Quang Cung.
According to analysis by financial data and business information provider FiinGroup, the production capacity of Viet Nam's cement industry is expected to increase sharply thanks to the strong expansion of local private enterprises, including Thanh Thang Group Cement JSC, Vissai Group, ThaiGroup Corporation (formerly known as Xuan Thanh Group) and Long Son Co Ltd.
Many of the new facilities are located in central Viet Nam, where demand for cement is relatively low compared to the north and the south. It seems these private businesses are targeting the export market, FiinGroup said.
This year, the industry has targeted exporting about 25 million tonnes of cement and selling between 69 and 70 million tonnes domestically.
Statistics from the General Department of Viet Nam Customs showed that in the first five months of this year, the cement industry exported more than 13.8 million tonnes, a year-on-year increase of 4 per cent in volume and 23.2 per cent in value.
These are impressive results in the context of continued trade defense lawsuits filed by countries both inside and outside the region against Vietnamese cement exporters. Currently, Viet Nam is exporting cement products to at least 40 markets.
Cung told news site tinnhanhchungkhoan.vn that the outlook of local cement businesses has improved thanks to the positive export results. Export volume is likely to exceed 32 million tonnes this year. The share of exports that are cement rather than lower-cost clinker is increasing, driving up overall export value.
Therefore, the cement sector is likely to prosper in the last six months of 2019, especially in the construction season at the end of this year.
However, Cung said businesses with out-of-date technology and small-scale production still face difficulties because they cannot export their products. To remedy this, businesses must invest in hi-tech, environmentally friendly solutions that save energy.
The growth of cement companies is still large; according to FiinGroup’s forecast, Viet Nam's cement market will reach equilibrium by 2028. Based on the analysis of macroeconomics and historical cement demand since 2000, growth in demand is forecast at 5 per cent per year until 2030.