Vietnam’s cement industry may face surpluses of five million tons in 2009 and 10 million tons in 2011 after years of efforts to develop the industry, the Ministry of Construction has warned.
The oversupply is attributed to a rapid expansion in cement manufacturing bases with major investments in 40 recent cement projects, including Haiphong and Song Gianh that churn out a total capacity of 42.6 million tons a year.
The ministry added that in spite of facing a few difficulties such as obtaining investment and oversupply, the higher cement production capacity is a good sign and will aid in reducing annual imported clinker tonnage.
However, with 30 new large-scale projects slated to begin operations over the next three years, and with local demand being outstripped by production will aggressively look to export into new markets abroad.
While demand for cement within the country has been on the rise to keep pace with a booming construction sector, there is a real fear that the increased number of producers will cause a glut in the market that may stall the progress the industry has made over the last five years.
Economists said after many years of facing cement shortages, the industry has made ambitious strides to develop and will now have to look at inventive strategies to fine buyers for excess product.
The local market is expected to become extremely competitive over the next few years as producers look to gain a foothold in a buyers’ market.
Experts believe that further problems will arise when the country enters into the World Trade Organization, and the industry will have to counter flooding of the market by cheap imported cements.
The ministry has asked the government to reign in the industry by limiting the number of investment licenses for cement projects and asking provinces to cease investments in cement production.
Vietnam, which is now home to around 70 cement plants and some 30 grinding stations, turns out a total of 32 million tons of cement each year, meeting 80 per cent of local demand. VNS
Vietnamese
