When will the cement industry's supply and demand be out of sync?

Huge imbalance

Recently, the Ministry of Construction reported to the Prime Minister about handling press reports that the cement industry has yet to solve the supply-demand problem.

The cement industry has yet to solve the problem of serious supply-demand imbalance. Photo: HY

According to the report of the Ministry of Construction, currently, the whole country has invested in 92 production lines, with a total capacity of over 122 million tons/year. However, in 2024, the total output of cement and clinker consumed will be only about 95 million tons, domestic about 65.3 million tons and export about 29.7 million tons. Thus, the cement production lines only operate at an average of about 77% of the total design capacity, leading to excess supply.

Vietnam's cement and clinker exports are forecast to grow slowly and may remain at the same level as in 2024. Specifically, in the first two months of this year, the entire industry exported more than 2 million tons, worth 76 million USD, down 36.7% in volume and 36% in value compared to the same period in 2024.

The export market is gradually shifting to new markets such as the US, North America, South America and Africa. According to the Ministry of Construction's calculations, the cement consumption demand of the whole industry in 2025 is about 95 - 100 million tons, an increase of 2-3% compared to 2024. Of which, domestic consumption is about 60-65 million tons, export is about 30 - 35 million tons.

The Ministry of Construction said that since 2011, investment in cement production has been carried out in accordance with the planning for the development of Vietnam's cement industry for the period 2021 - 2020 and orientation to 2030 in Decision No. 1488 of the Prime Minister (abbreviated as Planning 1488).

In 2015, consumption was 72.7 million tons, equal to 98% of the plan; in 2020, consumption was 100.2 million tons/year, equal to 107% of the plan. However, from 2020 to now, cement supply has increased due to the 2017 Planning Law abolishing Planning 1488.

Investment in cement production lines is carried out according to market mechanisms and investment laws, under the authority of the provincial People's Committees. Therefore, localities have approved the investment policy of 13 modern technological production lines with a total designed capacity of 35.3 million tons per year.

Faced with the rapid increase in the number of cement factories, the Ministry of Construction submitted to the Prime Minister a decision on the strategy for developing Vietnam's construction materials for the 2021-2030 period, with a vision to 2050, which includes a roadmap for investing in cement factories.

Specifically, the total design capacity by 2025 will not exceed 125 million tons/year; by 2030 it will not exceed 150 million tons/year.

In 2021, the Ministry also sent a document to the People's Committees of localities requesting that before considering and deciding to approve investment policies for cement production projects, it is necessary to consider avoiding widespread investment, leading to oversupply and wasting social resources.

But in reality, supply and demand in the cement market are still very unbalanced, with an excess supply of tens of millions of tons, causing difficulties in consumption, fierce price competition, and some manufacturers selling below production cost.

Large supply surplus, slow growth in domestic consumption, even decreasing, export channels in the last 3 years have decreased sharply, reaching only around 30 million/ton/year, leading to many factories having limited production, risk of closure, loss and bad debt.

Another disadvantage for the cement industry, according to Dr. Tran Ba ​​Viet, Vice President of the Vietnam Association of Building Materials, is the decline in the real estate market. “ Only when real estate transactions are vibrant and construction activities develop can other industries such as cement, steel, concrete, etc. grow, ” said Dr. Tran Ba ​​Viet.

It is necessary to forecast cement consumption demand with a 10-year and 20-year vision.

In the long-term strategy, the cement industry still focuses on domestic consumption. To stimulate demand, the Vietnam Cement Association and a number of industry associations have proposed that the Government take measures to promote the demand for construction materials through the development of housing, infrastructure, roads and the application of new technological solutions. Increasing the use of cement in construction not only helps improve the quality and longevity of works but also supports businesses to overcome difficult times.

A representative of the Vietnam Cement Corporation (VICEM) said that the unit is speeding up the progress of the project to utilize excess heat from exhaust gas to generate electricity at member cement factories. Thereby, helping to proactively supply electricity and save production costs.

To fundamentally overcome the gap between cement supply and demand, a long-term solution is needed. In an interview with a reporter from the Industry and Trade Newspaper, Mr. Nguyen Quang Cung, Chairman of the Vietnam Cement Association, said that it is necessary to forecast cement consumption demand with a 10-year and 20-year vision as a basis for determining production scale, helping to balance supply and demand appropriately. In addition, to save resources, it is possible to utilize waste from other industries such as slag and fly ash from thermal power plants as raw materials for cement production.

Recently, the Ministry of Construction announced the Plan for exploration, exploitation, processing and use of minerals as construction materials for the period 2021-2030, with a vision to 2050. This will be the basis for developing the construction materials industry in the coming time, ensuring effective use and no waste of resources.

According to the Vietnam Cement Association, to resolve difficulties for the cement industry, there needs to be close coordination between the Government, ministries, sectors and businesses. Promoting public investment, developing infrastructure and reviewing export tax policies will help businesses expand their consumption markets.

At the same time, reforming administrative procedures in granting licenses for mining raw materials is an important solution to ensure a stable supply, helping businesses maintain production. In the current difficult context, timely support from state management agencies is a key factor in helping the cement industry overcome challenges, maintain growth and develop sustainably.

Duy Anh