Displaying items by tag: Vietnam

The news this week that Vietnam's state-owned cement producer, Vicem, has made a first half profit 75% larger than that of the first half of 2011 is a surprising statistic from a country with so much spare cement.

The country has spent most of the past decade building cement plant after cement plant. According to research conducted for the April 2012 issue of Global Cement Magazine, Vietnam now has a cement capacity of over 70Mt/yr! Vicem says that it sold 9.7Mt of cement in the first six months of 2012 and reports that this level represents 44% of its intended production for the year. This makes its 2012 cement production target somewhere in the region of 22Mt.

How much of the non-Vicem cement capacity is being utilised in Vietnam is unknown, but it is certainly too much for Vietnam's current needs. When the country's own government owned cement producer announces that it expects to have 6Mt of cement stockpiled by the end of 2012 (enough to supply the UK for the whole of 2013), it is clear that there is a serious cement surplus. Oversupply has not been met by demand, cement prices are depressed and attempts to export, to countries both near and far, are on the up.

To help curb the problem, one cement plant project has been halted in the past week. The Kinh Bac City Development Share Holding Corp (KBC) has received permission from its state to not build its planned 5Mt/yr plant.

Halting new projects is one way for the country to reduce its overcapacity, but in the short term the industry is looking at exports. While its lengthly coastline makes getting cement to ports for export fairly straightforward, Vietnam is badly located to exploit its current situation in this way. It's proximity to China, which itself is starting to face an oversupply scenario despite its efficiency gains, leaves Vietnam at a cost disadvantage.

As well as there being China on Vietnam's doorstep, many other countries in the region, (Indonesia, Malaysia, Japan, South Korea, Philippines, etc), are also self-sufficient in terms of cement and are able to export extra capacity as necessary. Additionally, East Asian countries have often seen Africa as a good export market but the recent rise of Nigeria as a major producer may reduce this opportunity.

Amid all of these numbers the Vietnam News Brief Service commented that the current oversupply in the socialist state was down to the 'unplanned' construction of cement plants over recent years.

Vietnam: The state-run Vietnam Cement Industry Corporation (VICEM) has announced that it made a pre-tax profit of US$15.9m in the first half of 2012, a 73% year-on-year rise compared to the first half of 2011 and 44% of its whole-year target. Howver, its revenues fell by 1.2% year-on-year to US$682m during the same period.

Vicem reports that it sold 9.71Mt of cement and clinker in the first half of 2012, a 1.4% drop compared to the same period of 2011. Of the total 0.65Mt was exported, a 1.5% increase. Vicem produced 7.45Mt/yr of cement and 7.08Mt/yr of clinker between January and June 2012.

Meanwhile, a city authority has called a halt to the construction of a new cement plant amid continued overcapacity in Vietnam. Kinh Bac City Development Share Holding Corp (KBC) has received approval from authorities from the central province of Nghe An to withdraw from a cement plant project worth of hundreds of millions of US Dollars.

Construction of the Saigon-Tan Ky plant, which was planned to have a designed capacity of 5Mt/yr, was started on 19 May 2010 and it was expected to be developed in two phases. The production capacity for the first phase was projected to be 2500t/day (0.95Mt/yr). Investment for the first phase was proposed at US$71.8m. Local media has reported that the support structures for the three kiln plant have not yet been completed.

Vietnam had around 2.8Mt of cement in inventories by the end of June 2012 but the figure is expected to rise to as much as 6Mt by the end of the year. Local media reports that the overcapacity has been brought about through the 'unplanned construction of cement plants' in recent years.

Vietnam: Vietnam's Ministry of Construction has proposed the creation of an association for cement and clinker exporters to curb 'unhealthy' competition among them. The proposal has been sent to the prime minister for approval.

In its proposal the ministry said that Vietnam's cement and clinker exports have been 'badly affected' because some companies cut export prices to 'unfairly' compete with the rest. At present Vietnam has eight cement and clinker exporters. Six, Vicem, Ha Long, Thang Long, Cam Pha, The Vissai and Cong Thanh, are domestic. The remaining two, Chinfon and Phuc Son, are joint venture companies.

The ministry has called on local cement companies to cooperate rather than undercut each other in order to liquidate their large inventories through exports. The inventories are the biggest challenge facing the industry, it said. Exporting is considered a temporary measure to deal with the rising inventories which were caused by frozen real estate market and unplanned construction of cement factories nationwide.

Vietnam held around 2.8Mt of cement in inventories at the end of June 2012. The figure is expected to rise to 6Mt by the end of 2012, an increase of 23% on year-on-year.

Indonesia: PT Semen Gresik, Indonesia's largest cement producer, plans to spend US$400m-US$500m to expand its operation into Vietnam and Myanmar by the end of 2012, according to its general director Dwi Soetjipto.

Semen Gresik intends to finance 20% of the expansion with internal cash and the remainder with external sources, possibly from a global bonds issue. In case any negotiations conclude by the end of 2012, Semen Gresik would likely issue bonds in 2013, Dwi added.

The company has been assessing potential local partners for a joint venture for a plant in Myanmar to produce around 600,000t/yr, in which Semen Gresik will contribute US$150m. However, Dwi Soetjipto declined to discuss Vietnamese expansion plans in detail, hinting at an acquisition.

Semen Gresik reported total assets of US$2.25bn at the end of March 2012. The firm's revenues in the first quarter of 2012, rose by 20% year-on-year to US$458m. Its cement sales fell at 4.94Mt in Jan-Mar period, making up 39.3% of Indonesia's market share. Semen Gresik predicts that its cement sales will reach 22.5Mt/yr in 2012, up from 19.72Mt/yr in 2011. Revenues are expected to rise 15% year-on-year to US$1.93bn.

Vietnam: The Vietnamese minister of construction has claimed that the master development plan for the country's cement industry from 2011 to 2020 approved by the Prime Minister is still in line with market movements and that there is no 'cement crisis' in the country.

Trinh Dinh Dung said that Vietnam consumed 55Mt out of 64Mt of cement produced in 2011, with consumption accounting for 89% of production. "I confirm that there is no cement crisis caused by the development scheme as raised by some people," said the minister.

The country currently has a huge cement surplus given its low domestic consumption. Under a policy of public spending cuts, the amount of construction work is actually falling, pushing down consumption of building materials.The country is forecast to use 55-56Mt of cement in 2012, accounting for just 80% of its own output. "We can't say that the cement development plan triggers an oversupply crisis," said Dung.

One of the biggest questions is why the country still imports cement when it faces huge inventories. The minister explained the country must stick to local commitments that stipulate that ASEAN members cannot impose import bans or tariff barriers on cement. Furthermore, market forces also prompt cement imports, he said.

Cement is mainly produced in the north of Vietnam, resulting in high cement prices in the south due to transport fees. Sometimes, the price of local products gets higher than that of products imported from Thailand.

"In a market economy, the country must import goods from overseas markets at competitive prices if domestic production shows low efficiency," said the minister.

Vietnam: Cement producers in Vietnam are estimated to have made 22.5Mt of cement in the first five months of 2012, down 7.2% from the same period of 2011.

In May 2012, the Southeast Asian nation is likely to have produced 5.5Mt of cement, up by 5.5% year-on-year, according to a report from the the government's General Statistics Office. The office also revised down the country's cement output in January to April 2012 to 17.1Mt from earlier estimated figures of 17.8Mt.

In 2011, Vietnam produced and sold 49.3Mt of cement. The country also imported 1.15Mt of clinker and exported 5.5Mt of cement and clinker during the period/

Vietnam's cement consumption is forecast to reach 55 – 56.5Mt in 2012, rising by 11 - 12% compared to 2011. However the country's cement output is expected to rise to 73Mt in 2012 due to the additional operation of eight new cement plants with a combined production capacity of 6.9Mt. Local cement makers are predicted to face huge difficulties due to big surplus of cement.

Vietnam: Vietnam's cement sales came to 9.57Mt in the first quarter of 2012, according to the Ministry of Construction. This fulfilled 17.4% of the whole-year plan due to the implementation of several projects in March 2012. Production was 9.98Mt, meeting 18.1% of the full-year target. Production in March 2012 was 4.85Mt, representing nearly half of the quarter's total.

Vietnam spent US$90.5m on imports in the first quarter of 2012, making up 20.7% of the whole-year plan, including US$30.9m in March 2012. The country's exports were US$43.3m, fulfilling 19.2% of the full-year target, including US$10.4m in March 2012.

National consumption is forecast to reach between 55Mt and 56.5Mt in 2012, rising by 11% and 12% from 2011 respectively. Yet the country's cement output is forecast to rise to 73Mt in 2012 due to the additional operation of eight new cement plants with combined production capacity of 6.9Mt. In 2011 Vietnam produced and sold 49.3Mt. The country also imported 1.15Mt and exported 5.5Mt of cement and clinker during the period, the ministry noted.

Vietnam: Vietnam's Ministry of Construction has announced that it will temporarily delay work on several approved cement projects in the country. The move was announced with the spectre of severe cement overcapacity looming over the country. In 2012 it is expected that the country will consume around 50Mt of cement, 10Mt short of its existing 60Mt/yr capacity, according to the Vietnam Cement Association (VCA).

The director of the ministry's Construction Materials Department, Le Van Toi, noted that many cement producers were facing losses due to decreasing consumption and high interest rates. "Many cement producers have had to borrow up to 80% of their total investment capital and that eats most of their profits while interest rates remain high," he said.

Toi said that the Thanh Liem Cement Plant in northern Ha Nam Province had to close its doors due to significant losses, although the plant has not yet declared bankruptcy. Many other plants have cut their capacity sharply. "If the situation continues, the number of cement plants that will have to shut down will surge in the near future," Toi warned.

VCA's chairman Nguyen Van Thien urged cement producers to boost their trade promotion and export heavily in 2012 to deal with the surplus. He expected that the producers could export more than 7Mt of cement in 2012, a massive increase over 2011, when the country exported 1.5Mt. Vietnamese cement is exported mainly to China, Indonesia and Bangladesh, as well as several African and southeast Asian countries.

Vietnam: The Vietnamese cement industry continues to suffer the effects of overcapacity and is struggling to export enough cement. The industry faced many difficulties in 2011, in part due to its stagnant real estate market. In 2012, however, eight new cement plants will go into operation with a combined capacity of 6.9Mt/yr. This will bring the total capacity of the country to 73Mt/yr, worsening the oversupply situation.

According to the Vietnamese Cement Association, the total demand for cement in 2012 will be about 60Mt/yr, of which 53Mt/yr will be for domestic consumption. Currently cement is exported to China, India and a number of Asia Pacific nations. Africa is also becoming a promising market. While China is reporting soaring consumption, India itself is facing overcapacity as demand weakens, threatening this export market for Vietnam.

Vietnam currently faces difficulty in supplying cement overseas. Its domestic infrastructure is poor and input costs, like those around the world, are increasing. There is also a poor perception of Vietnamese cement exports, which may be damaging trade.

Vietnam: Vietnam's industrial production grew by 6.8% in 2011, lower than that of 2010, according to data released by the Vietnam General Statistics Office (VGSO). Manufacturing industries, the inventory indices of which rose sharply in 2011, include cement, which was up by 64% year-on-year. 

Meanwhile, Vietnam is forecast to export 0.5Mt of cement and 5.5Mt of clinker in 2012, according to an official from the Vietnam National Cement Association (VNCA). The VNCA's Chief, Nguyen Van Diep, said that Africa would be the targeted market for most of the material.

Vietnam's cement output is forecast to rise to 73Mt in 2012 due to the additional operation of eight new cement plants that have a combined production capacity of 6.9Mt/yr. Meanwhile, the country’s cement consumption is predicted to be around 60Mt in 2012, accounting for 86% of the sector’s total production.

Diep maintained these targets despite cement sales in 2011 falling short of the 54.5 - 56Mt forecast. Cuts in public investment and frozen real estate projects have cut demand significantly in 2011, to around 49Mt.