Displaying items by tag: Nghi Son Cement

Vietnam/US: Several Vietnamese cement companies, including Long Son Cement, Nghi Son Cement, Vicem Ha Tien Cement, Thanh Thang Cement, and Xuan Thanh Cement, raised their exports to the US in early 2024. The reasons for the increase include an ongoing local shortage in the US, Việt Nam News has reported.

In 2023, Vicem Ha Tien Cement and Nghi Son Cement made their first shipments of cement to the US, averaging 40,000t per shipment. Vietnam's cement industry, with a production capacity of 120Mt/yr, is experiencing a surplus of 60Mt. To address this, producers have increased their exports, with the majority of sales going to China, the Philippines, Bangladesh, Taiwan and some Middle Eastern countries.

The close of the first half of 2023 brought the latest crop of seasonal cement data from the Vietnam National Cement Association (VNCA). Vietnam sold 61.4Mt of cement and clinker during the first half of 2023, up by 2.7% year-on-year.¹ Graph 1 (below) tracks the progress of full-year Vietnamese cement and clinker sales over the six years up to 2022, as well as the most recent half-year.

Graph  1 - Vietnamese annual cement production, January 2017 – June 2023

The first half of 2023 marks the first half-year in which lockdown restrictions have been absent in both Vietnam and its main export market, China, since the start of the Covid-19 outbreak.² Vietnam was especially hard-hit: it implemented the first lockdown outside of China in March 2020, and has recorded the 13th most Covid-19 cases of any country up to July 2023. Then, the Russian invasion of Ukraine in 2022 caused uncertainties for cement producers and importers all around the world. Yet the price of imported coal across Southeast Asia had returned to pre-war levels by the end of June 2023.³ This indicates that the first half of 2023 may represent a ‘typical’ first half for the Vietnamese cement industry, for the first time this decade. During the 2010s, this meant growth margins of over 10% year-on-year.

During the first half of 2023, Vietnam’s sales volumes grew by 30% from pre-Covid-19 levels of 47.1Mt in the first half of 2019, confirming the industry trend of rapid capacity expansion. Just in the course of the half year, Vietnam’s integrated cement capacity rose by 7.9% to 123Mt/yr.⁴ It previously rose by 6.9% year-on-year to 114Mt/yr in 2022. That year, first-half cement sales also grew by 6.9% year-on-year, to 59.8Mt from 55.9Mt. In the first half of 2023, capacity growth has outstripped the country’s sales growth, of 2.7% year-on-year.

Meanwhile, Vietnam exported 15.7Mt of cement and clinker in the first half of 2023, 26% of its total despatches.⁵ This corresponds to a decline of 31% year-on-year from 22.7Mt (38% of despatches) in the first half of 2022 and a rise of 0.5% from pre-Covid-19 levels of 15.6Mt (33%) in the first half of 2019.

Chinese construction is the lynchpin in the Vietnamese cement industry’s current growth model. Over successive Five-Year Plans, it has consumed increasing volumes of clinker from Vietnam, as well as cement, at diminishing prices. This strategy overreached itself in the first quarter of 2023, more than a year into an on-going Chinese property market slump, when the value of Vietnam’s cement and clinker exports to the country fell by 95% year-on-year, to US$11.4m.⁶

By lowering prices, Vietnam’s cement sector charts a careful course within the contested waters of global trade rules, but it has run aground before. Most recently, from the start of 2023, the Philippines attached tariffs of up to 28% (and up to 55% for blended cement) to Vietnamese cement from 11 different producers.⁷ The Philippines Tariff Commission had found that ‘dumped’ cement from Vietnam – constituting over 50% of cement imports over the 18 months up to the end of 2020 – threatened the domestic industry. The failure to diversify its markets is a further sign that Vietnam’s current positioning in the cement and clinker trade is, at best, medium-term.

From October 2023, cement entering the European Union (EU) will become subject to extra taxes under the carbon border adjustment mechanism (CBAM).⁸ The EU is a relatively small trade partner for Vietnam, but the longer-term effect of this policy will be to replicate itself in the statute books of other nations and trade blocs, beginning in the Global North. With forecast lignite imports of 70 – 75Mt to Vietnam in 2023 – 2026, opportunities for cement exports from Vietnam, and countries like it, are diminishing.

The best situation for Vietnam would be accelerated growth in its domestic consumption base. The government is attempting to trigger a construction boom with its 2023 budget, which includes US$5bn in residential construction funding. Meanwhile, full-year infrastructure spending will rise by 25% year-on-year.⁹ To this end, it also needs to keep the cement price low. From 1 January 2023, Vietnamese exporters paid a tax of 10% of value on shipments of cement and clinker, instead of the previous 5% rate. If successful, this will nourish booming consumption with booming, and cheap, supply. Vietnam is grafting its Chinese model back onto the domestic market.

Producers will keep exporting. In May 2023, Nghi Son Cement Corporation despatched a first shipment of 31,500t of cement to the US. Nghi Son Cement Corporation’s cement, produced with fly ash, is clearly considered by the company and its owners to have some long-term marketability in the US. Said owners include Japan-based Taiheiyo Cement, which produces cement in the US via its CalPortland subsidiary.

In Vietnam, the cement industry has undergone a period of unparalleled growth, fuelled by exports. It can now reinvest the proceeds in establishing a self-sufficient construction sector around an ever more sustainable cement industry, ready to become the first choice across new markets as they arise in Southeast Asia and beyond.

1. Global Cement, 'Vietnam's first-half cement production declines in 2023,' 29 June 2023, https://www.globalcement.com/news/item/15941-vietnam-s-first-half-cement-production-declines-in-2023

2. The Observer, ‘‘It was all for nothing’: Chinese count cost of Xi’s snap decision to let Covid rip,’ 29 January 2023, https://www.theguardian.com/world/2023/jan/29/chinese-cost-covid-xi-lockdowns-china

3. Reuters, ‘Column: Asia thermal coal prices get the blues from Europe and LNG,’ 20 June 2023, https://www.reuters.com/markets/commodities/asia-thermal-coal-prices-get-blues-europe-lng-russell-2023-06-20/

4. Việt Nam News, ‘Record input costs thwart cement groups,’ 12 July 2023, https://global.factiva.com/ha/default.aspx?mod=SavedSearch_SelectSearch&page_driver=SavedSearch_SelectSearch#./!?&_suid=168119771197707004455190223307

5. Việt Nam News, ‘Industry: Vietnam’s Cement, Clinker Exports +82.2% y/y to $116M in Jun: GSO,’ 4 July 2023, https://global.factiva.com/ha/default.aspx?page_driver=searchBuilder_Search#./!?&_suid=168908188871006418595282713178

6. Vietnam Investment Review, ‘A strenuous year ahead in cement,’ 9 May 2023, https://vir.com.vn/a-strenuous-year-ahead-in-cement-101707.html

7. Global Cement, 'Philippines Department of Trade and Industry to impose anti-dumping duties on cement from Vietnam,' 22 December 2022, https://www.globalcement.com/news/item/15084-philippines-department-of-trade-and-industry-to-impose-anti-dumping-duties-on-cement-from-vietnam

8. Global Cement, 'Too taxing? How the CBAM affects cement exporters to the EU,’ 29 June 2022, https://www.globalcement.com/news/item/14316-too-taxing-how-the-cbam-affects-cement-exporters-to-the-eu

9. Customs News, ‘Cement enterprises expect a "brighter" second half of 2023
https://english.haiquanonline.com.vn/cement-enterprises-expect-a-brighter-second-half-of-2023-25368.html

Vietnam: Nghi Son Cement Corporation has despatched its first batch of cement to customers in the US. The shipment consisted of 31,500t of cement produced at the company's Thanh Hoa cement plant. Việt Nam News has reported that the producer moved into the US market due to declining cement demand domestically.

Nghi Son Cement Corporation is a joint venture of Vietnam Cement Corporation (Vicem), Japan-based Taiheiyo Cement and Japan-based Mitsubishi Materials.

Vietnam: Only four cement producers have built waste heat recovery (WHR) systems by the end of 2015 despite a request by the Prime Minister Nguyen Tan Dung. Holcim, Chinfon, Ha Tien and Cong Thanh are the only companies to have built the upgrades. The delay has been blamed on the high cost of implementing WHR systems and the market’s poor sales.

According to Nguyen Hoang Cau, secretary general of the Vietnam Cement Association, there are more than 40 cement production lines in the country subject to the requirement. These also include foreign cement producers such as Taiwanese-backed Phuc Son Cement, Hong Kong’s Luks Cement Vietnam Limited, and Japanese-funded Nghi Son Cement. Cement producers have complained to local press about their inability to build WHR systems without financial help.

Vietnam: According to Vietnam News Brief Service, deputy prime minister Hoang Trung Hai has agreed to allow Nghi Son Cement Corporation to continue the pilot import of fly ash as a raw material for its cement production.

The deputy prime minister had earlier agreed to allow Nghi Son Cement Corporation to import no more than 200,000t/yr of fly ash in 2015 - 2016. He also requested the company to develop a plan to use domestic fly ash for cement production from 2017.

Vietnam has a huge supply of fly ash. It is estimated that the thermal power plants in Vietnam produce 4.5Mt/yr of fly ash. The figure is expected to hit 35Mt/yr in 2030. According to Vietnam News Brief Service, agencies, companies and localities have not shown their willingness to share interests with others, leading to fly ash sourcing difficulties for many companies.