Gloomy picture for cement industry as supply far exceeds demand

A worker at La Hiên Cement Co in Thái Nguyên Province. — VNA/VNS Photo Hoàng Nguyên

The domestic cement industry faces a bleak outlook this year, with supply significantly outpacing demand, insiders said.

Nguyễn Thanh Tùng, Deputy General Director of the Vietnam National Cement Corp (VICEM) said the domestic cement market this year will continue to struggle as supply far exceeds demand.

While cement supply is projected to reach approximately 124.75 million tonnes this year, domestic demand is only expected to be around 63.5 million tonnes. Tùng also noted that the production cost of raw materials and fuel remains high.

As a result, many cement manufacturers are engaging in fierce price competition to maintain their market share and boost consumption.

Meanwhile, export markets present a challenging outlook, with several countries and territories tightening trade barriers on imported cement products. Notably, Taiwan (China) has launched an investigation into potential anti-dumping practices concerning cement exports from Việt Nam.

Furthermore, the Philippines has not only imposed anti-dumping taxes on Vietnamese cement, but is also considering implementing additional self-imposed taxes to safeguard its domestic production sector, according to Tùng.

Domestic companies are also grappling with intense competition on both selling prices and transportation costs from regional rivals such as Indonesia and Thailand.

They have faced growing challenges in exporting to the European market due to stringent environmental protection policies, tax barriers, strict carbon emission regulations and high quality standards.

Looking ahead, cement producers will need to make substantial investments in technology and waste control systems to meet state regulations on reducing dust and CO2 emissions from the production process. However, these improvements are likely to lead to higher costs, Hùng said.

This year, VICEM aims to sell 17.87 million tonnes of clinker in the domestic market, marking an 8.3 per cent increase compared to last year. The company is targeting a revenue of over VNĐ29.41 trillion by the year-end.

Expert Nguyễn Quang Cung has petitioned the Government to draw up solutions to increase cement consumption in the domestic market.

To address the surplus in cement supply, Cung highlighted the importance of adopting cement reinforcement technology for roadbeds instead of traditional methods, to enhance the quality and durability of road infrastructure.

The Vietnam Cement Association has urged the Government to quickly submit a proposal to the National Assembly to abolish the export tax on clinker, arguing that it is a deeply processed product, rather than a raw material.

In the short term, if the clinker export tax is not abolished, the association suggested the State retain the export tax on clinker at 5 per cent for the next two years and consider amending the value-added tax policy on clinker production so that clinker is classified as a commodity eligible for the value-added tax deduction.