Displaying items by tag: Vietnam

Vietnam: The Vietnam National Cement Corporation (VICEM) says that total cement and clinker exports in the first eight months of 2020 were 23.9Mt, up by 16% year-on-year from 20.7Mt in the corresponding period of 2019. The total value of exports rose by 1.2% to US$882m from US$872m, corresponding to a price drop of 12% to US$36.9/t from US$42.1/t.

Saigon Online News has reported that the main source of demand growth is China’s burgeoning post-coronavirus lockdown construction market, where a 35% year-on-year increase in cement consumption in July 2020 has enabled Vietnamese producers and traders to undercut the cement prices of the newly streamlined domestic industry. China received 12.6Mt (53%) of Vietnam’s cement and clinker exports, followed by the Philippines with 4.5Mt (19%) and Bangladesh with 1.7Mt (7.1%).

Vietnam: China-based Sinoma International Engineering has announced its receipt of a provisional acceptance certificate (PAC) from the owner of the 1.8Mt/yr Tonglin cement plant, signifying the handover of the finished plant. The parties originally signed the engineering, procurement and construction (EPC) contract for the plant in August 2009.

Vietnam: Cement producers increased the total domestic output of cement by 3.9% year-on-year to 64.2Mt in the first eight months of 2020 from 61.8Mt over the corresponding period of 2019. Continuing at this rate, Vietnam will produce 96.3Mt of cement in 2020, down by 0.2% from 96.5Mt in 2019.

Back on 11 March 2020, this column drew attention to the seemingly intractable overcapacity situation in Vietnam. On that day, incidentally the day that the World Health Organisation (WHO) declared the Covid-19 outbreak to be a full-blown pandemic, Vietnam held firm on its previous estimate that it would produce 103Mt of cement in 2020. 70Mt would be consumed domestically, with 33Mt exported. At the time much of the world was heading down the coronavirus rabbit hole and we were incredulous. South East Asia was worst affected by lockdowns at that point and demand was poor. It was clear that the country would struggle to find buyers, even with its famously reasonable prices.

Fast forward five months and figures from last week show that Vietnam’s cement producers actually exported an incredible 19.5Mt in the first seven months of 2020. The volume was 11% higher than the 17.6Mt exported in the corresponding period of 2019. However, prices suffered, with the value of exports falling by 5.4% to US$732m. That works out at US$37.54/t in 2020 against US$43.98/t in 2019 - a drop of US$6.44/t. Now, just as in March, the Ministry of Construction has maintained again that Vietnam will export 32-33Mt of cement and clinker in 2020. The volumes seem impressive, but it’s ‘sales for show, profit for dough.’ How much longer can the country continue to pour such vast amounts of cement into the global market at these low prices?

Well it seems the answer is ‘not any more.’ Following an announcement in May 2020 that no new cement plant projects would go ahead in 2020 after all, there is now a new cement industry development strategy to help move the sector forward. Under the plans, all plants with a capacity under 0.9Mt/yr will be forced to improve their productivity, product quality, energy efficiency and, crucially, environmental performance, by 2025. While the government says it will help to facilitate the changes, we can be reasonably sure that it wants to reduce its domestic capacity to a fairly meaningful extent. The Global Cement Directory shows that Vietnam has at least 28 plants of less than 0.9Mt/yr capacity, jointly contributing around 16.6Mt/yr. While we should be clear that the government is not calling for the wholesale elimination of capacity, removing these plants would leave the country with around 86Mt/yr of cement production and halve exports to around 16.4Mt/yr, assuming 70Mt/yr of domestic consumption. On the surface the government says it will help plants ‘facilitate’ the changes, but it remains to be seen whether its many older, less efficient plants will actually be able to jump through the hoops the authorities put in their way. Of course, one need look no further than neighbouring China to see how effective such directives from the top of government can be.

For its part the Vietnamese government is clear: Plants that don’t pick up the pace will be closed. It says that the strategy aims to “Develop the cement industry to an advanced and modern level, to produce cement of international standard quality with economical and efficient use of energy, giving high competitiveness in the international market, while meeting the needs of the domestic market, completely eliminating out-dated, natural resource-consuming and polluting technology.” The government stops just short of mentioning profitability, but it is clear that this would be another nice effect of reduced capacity in an economy where the state is effectively selling the cement by itself. China again shows what should happen next. Following major profitability improvements in 2017, 2018 and 2019, China’s producers continue to go from strength-to-strength in 2020, even taking coronavirus closures into account. This week Anhui Conch reported a 5.3% increase in its first half net profit (to a tidy US$2.33bn), with China Resources Cement chiming in with an 11% rise to US$541m. While it is unclear from outside of China just how much capacity has been terminated, the changes are having the desired effect.

So, after looking for perhaps slightly too long at dwindling returns, Vietnam’s government appears to be serious about overcapacity. Its (larger) cement producers look set to gain from supply-side reforms in the same way that many in China have. The industry will shrink over the next few years and, while closures and job losses will be unpopular, the country, its economy and its environment will benefit from this policy in the long run.

Vietnam: Siam Cement Group (SCG) has donated four mobile pressure chambers for use by medical staff to collect samples without coming into contact with patients at the Da Nang Centre for Disease Control in Da Nang, South Central Coast Region. Viet Nam News has reported that the equipment has already been successfully used for mass sample collection in Thailand.

SCG subsidiary Vietnam Construction Materials general director Nopporn Keeratibunharn said, “Amid the rise of Covid-19 in the central area, SCG deeply understands and shares the responsibility to support and protect the local medical workforce via our innovation and expertise. When collecting samples, the medical workforce is prone to get in contact with the virus in micro-droplets from talking, sneezing, and coughing during the swab. Designed and built by SCG, these mobile positive-pressure chambers aim to avoid direct contact between the sample-collecting staff and the person providing the sample.”

Vietnam: The government has adopted a cement industry development strategy under which all plants below 0.9Mt/yr capacity must make investments to improve their productivity, product quality, energy saving and environmental protection by 2025. In order to facilitate this, the government says it will improve institutions and policies and improve the efficiency of raw materials exploitation, scientific research and industrial application, promoting domestic consumption, increasing available training and tightening environmental protections, according to Việt Nam News. Plants which fail to increase productivity in the specified ways will face closure.

The government says that strategy aims, “to develop the cement industry to an advanced and modern level, to produce cement of international standard quality with economical and efficient use of energy, giving high competitiveness in the international market, while meeting the needs of the domestic market, completely eliminating out-dated, natural resource-consuming and polluting technology for production.” The measure specifically targets the country’s overcapacity issue in its efforts to develop demand and its emphasis on product quality.

Vietnam: Producers have reported a 5.4% fall in value of cement and clinker exports to US$732m in the first seven months of 2020 from US$774m in the corresponding period of 2019. Volumes increased by 11% to 19.5Mt from 17.6Mt. Dautu Online News has reported that Bangladesh, China and the Philippines were among import markets for Vietnamese cement.

The Ministry of Construction maintains its 2019 projection of 32Mt – 33Mt of cement and clinker exports in 2020.

Bangladesh: Cement producers imported US$760,000-worth of raw materials in the 2020 financial year which ended on 30 June 2020, down by 13% year-on-year from US$874,000 in the 2019 financial year. Clinker, calcareous stone, granulated blast furnace slag (GBFS) and gypsum imports totalled 18.6Mt, down by 11% from 21.0Mt, compared to annual growth of 15 - 20% since 2010.

The Daily Star newspaper has reported that this was due to decreased cement demand, with sales falling to 65,000t in April 2020 from 125,000t in March 2020 on account of the start of the nationwide coronavirus lockdown. Premier Cement managing director Amirul Islam said, “We are not getting the benefits we expected from the government. The sector’s capital is gradually running out, so all kinds of discretionary tax cuts are needed to save this industry.”

Bangladeshi cement producers import raw materials from Thailand, Vietnam and China.

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.

Vietnam: ThyssenKrupp Industrial Solutions has announced the relocation of its Asia Pacific cement regional division headquarters to Hanoi from Singapore. The new headquarters are on the site of one of the company’s “largest cement plant engineering centres.” It retains offices in Singapore, Indonesia, Thailand and the Philippines. The main motivation for the move is to better enable ThyssenKrupp to supply Vietnamese cement producers.

Cement technologies chief executive officer (CEO) Pablo Hofelich said, “In our new headquarters, we bring together experts from Germany, Singapore and Thailand to support the Vietnam office. Vietnam is the largest market in terms of cement production capacity in a dynamic and growing Asia Pacific.” Asia Pacific cement business CEO Lukas Schoeneck said, “We are focusing on know-how transfer and the development of solutions that are tailored to the requirements of the local markets in Asia Pacific. Besides, we will expand our service activities to strengthen our local footprint and proximity to clients. Lastly, we will push sustainable technologies within our Grey2Green initiative.”