Vietnam Cement Market Recovery

When Vietnam's domestic sales fluctuate little, exports are the main driving force for the growth of the cement industry. A recent cement market report

by StoxPlus reported that cement and clinker sales reached 80.3 million tons in 2017.

Although Vietnam sales have accounted for more than 70% of total revenue for many years, the current growth is quite slow, from 9.5% (2015) to 到1.4% (2017). The main export activity last year was million tons 1,970, with a 帮助市场增长到27.7 of percent.

Vietnam's main markets are Bangladesh and the Philippines, where demand is growing. In addition, China is also a potential customer due to the tightening of polluting industrial activities by the Chinese government, such as the closure of a series of cement plants in November 2017.

However, in terms of export products, the value of cement export output decreased by 21.4% and 而熟料增长了53.8% last year compared with 2016. This makes clinker the main driver of export activity. Khieu Duy Hai, an analyst

at StoxPlus, said: This can be explained by the fact that foreign countries tend to prioritize clinker imports over cement for cost reasons, and this trend will continue to affect Vietnam's cement exports in the long run.

Vietnam currently has 107 cement plants with a total capacity of 1.209 billion tons per year, owned by 93 companies. In 2017, private companies continued to work on five major new projects with a total annual capacity of 18.5 million tons, increasing the industry's total capacity by 18%.

Not only Vissai or ThaiGroup, but also other domestic companies such as Thanh Thang and Long Son tend to "play an important role". The M & a market in the sector was very busy last year with the acquisition of LafargeHolcim and VCM from SCCC and SCG. In the second half of

last year, the government's Decree No.125 imposed a 0% export tax on cement, making the product more competitive compared to its Southeast Asian competitors.

It is estimated that exporting companies could benefit from an additional $3-4 per tonne due to the new tax.

The new rules are effective immediately and have had a positive impact on the cement market in the first four months of the year. Total sales reached 29.83 million tons, up 13% from the same period last year, according to StoxPlus. The main contributor was still exports, with sales to foreign countries growing to 29% at the time.

Based on macroeconomic analysis, infrastructure and urban development, StoxPlus forecasts cement demand to grow by about 5% by 2030. Vietnam is likely to face oversupply before it reaches 1.308 billion tons by 2027. "Although Vietnam's cement industry is still accompanied by real estate inflation and collapse, it is expected to maintain good growth in the coming years," the

report said.