Displaying items by tag: Vietnam National Cement Association

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: Vietnamese cement producers manufactured 61.4Mt of cement in the first half of 2023. This corresponds to a year-on-year rise of 2.7% from levels reported by Global Cement one year ago of 59.8Mt during the first half of 2022. Việt Nam News has reported that full-year production was 116Mt in 2022, up by 5.8% year-on-year from full-year 2021 levels.

Vietnam: New cement lines will raise Vietnamese cement production capacity by 4% year-on-year in 2023 to over 120Mt/yr. Vietnam News Summary has reported that upcoming new capacity scheduled to commence operations during the year include a 4.5Mt/yr line at a Xuan Tanh Cement plant and a 2.5Mt/yr line at a Long Son Cement plant.

Vietnamese cement demand was 65Mt in 2022. Several producers suspended cement lines during the second half of that year due to high costs and unfavourable market conditions.

Vietnam: The Vietnam National Cement Association (VNCA) has spoken about the difficulties that would arise from a proposed power price rise by state-owned Electricity Vietnam (EVN). VNCA chair Nguyen Quang Cung said that cement producers foresee 'business havoc' ensuing from any further cost increase to their operations. The industry says that reduced demand has prevented them from raising cement prices amid already high costs. Coal price growth is a significant contributor, and now accounts for 60% of the industry's operating expenses.

Cung said "Many companies are suffering losses and have suspended the operations of many production lines." He continued "We understand that EVN is claiming force majeure because they face the same challenge relating to the input cost burden."

Vietnam: The Vietnam National Cement Association (VNCA) recorded combined national cement and clinker exports of 24.8Mt in the first nine months of 2022, down by 26% year-on-year from the same period in 2021. This corresponded to US$1.1bn in value, down by 14% year-on-year. Việt Nam News has reported that the VNCA expects to achieve total cement and clinker production of 107Mt, against a national capacity of 130Mt/yr. Domestic demand was 65Mt.

Earlier in 2022, Long Son Cement commissioned a new 2.5Mt/yr integrated cement plant, raising national overcapacity to 200% from 196%.

Vietnam: Cement producers and exporters will pay an additional 5 – 10% tariff on their exports of cement and clinker from 1 January 2023. Viet Nam News has reported that the move aims to bring down local cement prices by increasing supply in the country. These have risen over the past six months, while export prices have remained level.

The Vietnam National Cement Association (VNCA) says that its members are struggling to increase exports in a highly competitive export market. In the six months up to the end of August 2022, China, the Philippines, Bangladesh, Malaysia and Taiwan all reduced their imports of Vietnamese cement. The decline included a ‘substantial’ reduction of imports by China and the Philippines. Exporters faced logistical difficulties in shipping cement to the Philippines, while China’s consumption dropped due to new Covid-19 restrictions and low residential construction activity there.

The VNCA forecasts cement production of 108Mt in 2022, against a national demand of 65Mt. It projected that a series of infrastructure projects will bolster domestic consumption between 2022 and 2025.

Vietnam: Vietnam National Cement Association (VNCA) members increased their cement production to 59.8Mt in the first half of 2022, up by 6.9% year-on-year from 55.9Mt in the first half of 2021. Vietnam News Brief Service has reported that producers’ June 2022 volumes were 11Mt, up by 13% year-on-year from 9.76Mt in June 2021. Full-year production was 101Mt in 2021.

Vietnam: Vietnam National Cement Association (VNCA) members exported 15.5Mt of cement in the first five months of 2022, down by 14% year-on-year from 16.2Mt in the corresponding period of 2021. The value of the cement and clinker was US$693m, up slightly from US$690m.

In May 2022, Vietnam exported 1.5Mt of cement and clinker, with a value US$92m, down by 52% in volume and up by 29% in value year-on-year.

Vietnam: Vietnam exported 43Mt of cement and clinker in the first 11 months of 2021, up by 24% year-on-year from 11-month export volumes in 2020. Viet Nam News has reported that the value of Vietnam’s cement and clinker exports rose by 28% to US$1.67bn. The country’s full-year cement and clinker exports in 2020 were 38.4Mt, with a total value of US$1.44bn.

Vietnam: Cement producers sold 45.7Mt of cement and clinker in the first half of 2020, down by 3% year-on-year from 47.1Mt in the first half of 2019. Exports grew by 1% to 15.6Mt from 15.4Mt. The Vietnamese National Cement Association (VNCA) says that producers retain a total of 0.8Mt of cement and 4.2Mt of clinker in inventory.