[Original] Serious Overcapacity of Domestic Cement, but Vietnam Cement Breaks a Breath of Relief

As the current rate of return/equity in Vietnam is less than 9%, the production efficiency of Vietnam's cement industry has declined significantly and cement production has continued to grow, the Ministry of Finance of

Vietnam said recently. Cement production in Vietnam increased by 9.6% in November 2019, according to the National Bureau of Statistics. In the first 11 months of this year, production is likely to rise 7.6% to 87,900 tonnes. The country's cement industry produced 90,200 tons of cement in 2018, up 9.1% year-on-year.

It is understood that in 2018, Vietnam's total domestic cement production capacity is 114 million tons per year, and the domestic demand is about 60 million tons per year. Vietnam's domestic cement production capacity is seriously excessive, and the local digestion is insufficient. Vietnam's cement industry will focus on the export market.

Vietnam is located in the eastern part of the Indochina Peninsula in Southeast Asia, bordering China's Guangxi and Yunnan in the north and Laos and Cambodia in the west, with a long and narrow territory of about 330,000 square kilometers, close to the South China Sea and a coastline of more than 3,260 kilometers. Among many trading partners, the price advantage and geographical advantage of the Chinese market have attracted the attention of the Vietnamese market. China's cement imports to Vietnam have been growing in recent years, according to the Department of Building Materials of Vietnam's Ministry of Construction.

Relevant data show that in 2018, cement imports exceeded 10 million tons, a record high!

Despite the serious overcapacity in China, the price advantage of imported cement has attracted the surplus cement from Southeast Asian countries to export to China under the background of partial periodic tension and high price of cement clinker in the coastal market along the Yangtze River. Before

2017, China's annual import of cement was less than 3 million tons. With the high price of clinker in China's coastal areas, the import volume of cement clinker as the main product increased explosively in 2018, reaching 13.63 million tons in that year alone, more than total import volume of 13 years from 2005 to 2017. The increase in

China's cement imports has also brought relief to Vietnam, China's largest source of cement imports.

Vietnam is the main source of China's cement imports, accounting for 76% of the total imports. At the same time, the import volume has obvious seasonal characteristics: the fourth quarter is obviously high, mainly because the fourth quarter is in the peak season of traditional construction in China, the demand is strong, and the price also has certain advantages. At present, with the increase of cement production in Vietnam, the Chinese market may be forced to "take over".