In 2021, Vietnam's cement market is still oversupplied, with a total supply of 100 million tons, but domestic cement demand is sluggish, competition continues to increase, and the cost of logistics and raw materials is rising, so domestic enterprises are facing increasingly prominent challenges. This year, the most serious problem in Vietnam's cement industry is the high price of raw materials and fuels for cement production, such as the price of imported coal has nearly doubled, the price of gypsum has increased by 37%, and the cost of cement admixtures has increased to varying degrees, but the price of cement has only increased slightly. Unable to absorb the high cost. According to the data disclosed in Vietnam, the total output of Vietnam is expected to reach 103 million tons in 2021, an increase of 1.4% over the same period last year, and the sales volume is 105 million tons, an increase of 2%, while the domestic consumption is 62 million tons, the same as in 2020. Due to the zero growth of domestic consumption and rising costs, the profits of Vietnam's cement industry have not increased.
Export is the only way out for Vietnam's cement industry. However, due to the impact of the COVID-19 epidemic, many seaports in the Philippines and China have been closed or quarantined, causing new difficulties for Vietnam's cement exports, and high freight rates are also an important factor. In the past three years, the annual export volume of cement and clinker in Vietnam has exceeded 30 million tons, of which the export volume of cement and clinker in 2021 is 4200-45 million tons, an increase of 19% over 2020, and the export volume is 2.1 billion US dollars, a record high.
Vietnam expects that domestic cement consumption will return to growth momentum in 2022, but due to overcapacity, increased fuel costs and fierce market competition, the gross profit margin of cement enterprises is difficult to improve. The rising cost of coal production and mining in Vietnam in 2022 may further lead to the continued rise in coal prices. However, the development of the cement industry also depends on whether the COVID-19 epidemic can be controlled. Vietnam's urbanization rate is 38.5%
in 2020 and 40.5% in 2021. According to the annual increase rate of about 0.9 percentage points, it can still effectively stimulate housing demand and building materials consumption (including cement) in the future. According to estimates, in 2019-2023, the total demand for new housing and replacement housing in Vietnam was 691700 units, equivalent to 2.5% of the total national housing demand in 2019. Public investment support in Vietnam is also expected to increase in 2022, which will promote the recovery of the cement consumption market.
China, Vietnam's largest cement export market, is gradually tightening the real estate market, and the "three red lines" limit the ability of enterprises to borrow and repay debts, and the demand for imported cement in the Chinese market is expected to decrease. In other markets, they face more tariffs, such as the Philippines, which imposes an import tax of about 5% of the sales price, and Bangladesh, which raises the tax rate from 15% to 23%. Vietnam's Ministry of Finance suggested that the government raise the export tariff rate of clinker products from 5% to 10% to restrict the export of non-renewable mineral products; Vietnam's building materials development strategy clearly requires that the export of clinker and cement should not exceed 30%.
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