Displaying items by tag: Vietnam
Cement overload in Vietnam
26 July 2017Last week we looked at the prospect of two new Angolan cement plants, a situation that will reportedly lead the country to being ‘self sufficient in cement.’ When we hear this phrase, very often from relatively small markets in Africa or Asia, the obvious next step invariably follows: The country in question will become a regional powerhouse for cement exports.
But try telling that to the desperate Vietnamese cement producers, swamped by chronic overcapacity and very low prices, both at home and abroad. In an effort to shift more of Vietnam’s cement mountain, this week the Ministry of Planning and Investment (MPI) proposed big changes to its handling of cement exports. At the moment cement is subject to a 5% export tax and does not receive VAT refunds. This means that Vietnamese cement has become less competitive than Chinese, Thai, Indonesian and Japanese cement on the regional market, compounding the oversupply situation at home.
The MPI now proposes to scrap the tax and allow for VAT refunds to avoid a colossal 36-47Mt oversupply of cement by 2020. It is quite staggering that this response hasn’t been considered before. This is especially the case, given that the VICEM’s General Director Tran Viet Thang asked for the government to look at the rules back in February 2017. Indeed the Vietnam Cement Association predicted an oversupply of nearly 50Mt/yr by 2020 in January 2017.
Vietnam exported 14.7Mt of cement and clinker in 2016 according to its domestic statistics service. The country was the seventh largest exporter of cement and clinker in 2016 in value terms, with a total value of US$431.7m. China, as one might suspect, topped the list, but only at US$683.6m, around 58% more than Vietnam. Given that China’s cement capacity is around 20 times that of Vietnam, this highlights the extent to which Vietnam is trying to rely on imports.
A market-led response to this would be to close some of the cement plants down and stop commissioning any new ones. China has made some inroads into this approach and Vietnam is following suit… to some extent. That said, however, Trinh Dinh Dung, the Deputy Prime Minster, inaugurated the second production line at the Thanh Thang Cement plant on 4 July 2017 and Long Son Cement will open its second production line at Long Son in late August 2017. That new line will add nearly another 3Mt/yr of capacity to the national total just by itself. On top of this, Thai-owned Siam City Cement Vietnam opened a new ‘terminal’ in Vietnam in late June. Thailand ranked above Vietnam in the cement and clinker export list for 2016 at US$612.2m, suggesting that, contrary to the obvious implication, the port could even be used to ship out Thai exports into Vietnam!
This is not the first time we have heard about Vietnam’s massive cement surplus but it is the first time that the government appears to have registered it as needing attention. A market-led economy would simply shut the plants down but Vietnam plays by different rules. Will changing the rules on tax help it sell out its surplus? Call us in 2020…
Vietnam proposes reduction in cement export tax
24 July 2017Vietnam: The Vietnam Ministry of Planning and Investment (MPI) has proposed a reduction in its cement export tax to help ease the oversupply in the domestic market. In a recent report to the government, the MPI said that Vietnamese cement firms are seeking ways to deal with their large inventory.
Under existing regulations cement is subject to an export tax of 5% and does not receive value added tax (VAT) refunds, meaning Vietnamese cement products have become less competitive than those of China, Thailand, Indonesia and Japan. In response, the MPI has asked the government to slash the cement export tax and allow firms to benefit from VAT refunds for cement exports.
The General Department of Customs’ statistics showed that, in 2016, Vietnam exported 14.7Mt of cement and clinker with a total value of US$560m. At present, cement supply in the Vietnamese market is around 20% higher than demand.
The Vietnam Cement Association has forecast that the country’s total cement output might reach 108Mt in 2018 and 120-130Mt in 2020, leading to an unsold inventory of 36-47Mt.
Vietnam: Bim Son Cement has ordered a vertical roller mill to grind clinker and slag from Loesche for its 4Mt/yr plant in Thanh Hóa province. The new mill will have a throughput of 250t/hr and be able to grind input materials into Ordinary Portland Cement PCB 40. The order also includes a silo, blower, filter and a packing plant. The new mill is scheduled for commissioning in August 2017. No value for the order has been disclosed.
The subsidiary of Vietnam National Cement Corporation (VICEM) previously commissioned a mill from Loesche in 2000. This was followed by a raw mill and a coal mill in 2006.
Vietnam: Siam City Cement Vietnam plans to invest up to U$50m on its cement plants in the next six to 12 months. The Thai-owned cement producer purchased Holcim Vietnam in March 2017, according to the Saigon Times Daily newspaper. It operates plants in Kien Giang, Ba Ria-Vung Tau and Dong Nai provinces and in Ho Chi Minh City.
Vietnam: Trinh Dinh Dung, the Deputy Prime Minster, has inaugurated the second production line at the Thanh Thang Cement plant at Thanh Nghi, Ha Nam. The new line has a production capacity of 1.3Mt/yr and it will raise the plant’s total capacity to 1.75Mt/yr, according to the Viet Nam News newspaper. The company has invested US$220m in the upgrade project.
Trinh Dinh Dung also said at the event that the Ministry of Construction would have to review the master plan for the cement industry in the 2017 - 2025 period with a vision towards 2035, and the master plan for exploration, exploitation and use of minerals for cement production by 2025. He urged domestic cement manufacturers to comply with environmental protection requirements, and invest in new technology to improve the quality of their products and protect the environment.
Vietnam: The government has approved development planning to start for an inland port for the Siam City Cement Vietnam Thi Vai cement grinding plant. The proposed site will be adjacent to the Thị Vải River, according to the Vietnam Investment Review magazine. The port is expect to be able to support barges with a capacity of up to 5000t. The plant was acquired by Thailand’s Siam City Cement in March 2017 when it purchased Holcim Vietnam from LafargeHolcim.
Vietnam: Vietnam exported 6.72Mt of cement and clinker worth US$235m in the first four months of 2017. This represents a 12.8% increase in volume terms compared to the first four months of 2016, but only a 7.9% in value terms.
In April 2017 the country’s clinker and cement exports rose by 6.7% month-on-month in volume terms and by 7.6% in value to 1.92Mt at a value of US$67.4m, according to the latest data from the General Department of Vietnam Customs.
Bangladesh, the Philippines, Peru, Mozambique, Malaysia and Taiwan remained the biggest importers of Vietnamese cement and clinker in the four-month period.
At present, Vietnam has become the fifth biggest cement producer and consumer in the world after China, India, Iran and the United States. The country now has 76 cement production lines with a combined output of 82Mt/yr. It is predicted to face a glut of between 25-35Mt/yr of cement by 2020 as domestic production has outstripped the real demand and local firms have failed to compete with other exporters in the region.
Vietnam: Cement sales rose by 6% year-on-year to 17.8Mt in the first quarter of 2017, according to data from the Vietnam Cement Association (VNCA). The total includes 12.9Mt of domestic sales and 4.8Mt of exports sales according to the Viet Nam News newspaper. Local cement production rose by 3.8% to 14.3Mt.
BillerudKorsnäs signs letter of intent with Vissai
24 April 2017Vietnam: Sweden’s BillerudKorsnäs has signed a letter of intent with Vissai Group regarding the use of its QuickFill Clean (QFC) cement paper sack product line. The deal was agreed at a workshop organised by the Embassy of Sweden with the Vietnam Ministry of Construction, according to the Viet Nam News newspaper. The new type of cement bags are intended to reduce leakage although their use will require changes in the handling of sacks throughout the supply chain. Representatives from the Vietnam National Cement Association, Vietnam Federation of Civil Engineering Associations and other ministries also attended the event.
Vietnam: Data from the General Department of Vietnam Customs reports that exports of cement and clinker rose by 11% year-on-year to 4.82Mt in the first quarter of 2016. Its value rose by 6.4% to US$169m. Bangladesh remained the biggest importer of cement and clinker from the country in the three-month period, accounting for 44.8% and 37.7% of Vietnam’s total clinker and cement exports in volume and value, respectively, according to the Viet Nam News newspaper. It was followed by the Philippines, Peru, Mozambique, Malaysia and Taiwan.