Cement consumption and export are facing difficulties while input material prices are increasing, causing cement enterprises to continue reporting losses.
The dark "color" of cement enterprises
According to the Ministry of Construction, the supply cement The national demand in 2024 will reach about 122 million tons, while domestic consumption demand will only reach about 60 million tons, exports will decrease compared to the previous year, leading to excess supply and fierce competition, and reduced selling prices...
Not to mention, the high prices of input materials such as electricity, coal...; production materials remain at high levels, causing production costs to increase sharply. The real estate market is sluggish, construction projects from public and private investment sources are slow to disburse, directly affecting domestic cement consumption demand.
Notably, Vietnam Cement Corporation (Vicem), a company with a capacity of up to 30 million tons of cement/year, recorded a loss of about VND1,400 billion last year. Although the loss was reduced by VND177.5 billion compared to the original plan, this is still the second consecutive year that Vicem has fallen into a loss situation (in 2023, it lost more than VND1,100 billion).
According to Vicem, in 2024, clinker production output will only reach 94.3% of the annual plan, with 15.94 million tons, down 3.6% compared to 2023; total revenue will only reach VND 27,150 billion, equal to 94.9% of the annual plan.
Or as Vicem Hoang Mai Cement, a member unit of Vietnam Cement Industry Corporation, said, although the fourth quarter of 2024 is the time to speed up construction projects, the cement industry still faces difficulties due to high cement supply, the domestic and export cement markets continue to compete fiercely on prices, pressure on product inventory, excess production capacity...
In 2024, Vicem Hoang Mai Cement achieved nearly VND 1,710 billion in net revenue, down 2% compared to 2023, but had a net loss of up to VND 67 billion (the previous year lost VND 31 billion). With this loss, HOM's accumulated loss by the end of 2024 has reached VND 92.4 billion.
For the cement industry's export channel in recent years, it has decreased from 45 million tons in 2022 to 29.7 million tons in 2024. The cement and clinker export market is facing difficulties due to low prices and increased demand for quality cement.
According to businesses, in the past 2 years, China has almost not imported cement and clinker, and even after a period of banning cement production to prevent environmental pollution, this country has returned to normal production. Bangladesh imports cement from surplus sources in Pakistan and the UAE; the Philippines imposes anti-dumping tax on cement imported from Vietnam (5-year application period from March 20, 2023). At the same time, it initiated a safeguard investigation on cement from 2019 to June 2024...
In fact, even if exports are possible, prices have dropped very low. Specifically, the FOB export price of cement to the Philippines at the end of 2024 will be only 40-40.5 USD/ton, down 2-3 USD/ton compared to the beginning of the year and down 8-9 USD/ton compared to the beginning of 2023.
Clinker export price to Bangladesh at the end of 2024 is at 28.5-29 USD/ton, down 2.5 USD/ton compared to the beginning of the year and down 10-10.5 USD/ton compared to the beginning of 2023.
Supporting the cement industry to 'overcome the waves'
The Ministry of Construction calculates that the industry's cement consumption demand in 2025 will be around 95-100 million tons, an increase of 2-3% compared to 2024. Of which, domestic consumption will be 60-65 million tons and export will be 30-35 million tons.
“ In 2025, the world situation is likely to remain complicated, due to the impact of geopolitical conflicts, some countries in the world may experience economic crises and recessions. That will impact the domestic economy and the market for consuming construction materials in Vietnam, in which the export sector of cement enterprises will be most affected, ” the Ministry of Construction said.
The biggest problem of the cement industry at the moment is the huge imbalance between demand and supply. The oversupply of cement is even greater, as there has been no industry planning for the past 6 years. Concerned about the bulging cement production capacity, while supply has exceeded demand by tens of millions of tons, in the past year, the Ministry of Construction proposed to the Prime Minister to assign this ministry to study and propose re-establishing the Cement Sector Planning.
Ministry of Construction pointed out that currently, the pressure of excess domestic clinker production capacity is extremely large, with over 50 million tons, while the domestic construction speed is very slow, leading to bad debt pressure of the cement industry which is and will become a burden on the economy. Without timely support solutions from the State, many businesses will go bankrupt.
At the recent conference summarizing Vicem's production and business activities in 2024, Deputy Minister of Construction Nguyen Viet Hung said that in the coming time, the objective difficulties of the cement industry will still be very large and cannot be eliminated immediately. Cement enterprises can proactively build flexible operating scenarios and adjust strategies to adapt to subjective causes. This is an issue that needs to be focused on identifying and solving.
“Vicem needs to focus on a number of solutions such as: Strengthening cost management; strictly controlling the cost chain from raw materials, fuel, production costs, processing, consumption, business management; implementing solutions to have a reasonable supply chain, reducing transportation costs”- Deputy Minister Nguyen Viet Hung noted and said that other important solutions are to promote domestic consumption and export; optimally exploit opportunities from key public investment projects; and seek and develop potential export markets.
Vicem will focus on implementing more drastic, timely and in-depth solutions in production, business and construction investment. Urge member units to closely follow the actual situation, closely coordinate between production and consumption and inventory management to review, develop scenarios and select the most effective furnace operation plan. Promote the application of scientific and technological advances, improve productivity and product quality, increase the use of alternative fuels in production. Strengthen production management to ensure stable product quality.
Regarding consumption, continue to closely follow the market and locality, build simple, easy-to-implement sales policies, ensure fairness and transparency. Monitor and evaluate the implementation of new products in units to make appropriate adjustments and diversify products; develop bulk cement according to the trend of shifting demand from bagged cement to bulk cement; increase consumption output in commercial concrete mixing stations, proactively approach to bring cement into public investment projects...
To help cement manufacturers overcome difficulties, the Vietnam Cement Association recommends that the Prime Minister and ministries and branches find solutions to increase domestic cement consumption through the use of viaduct solutions in highway investment, especially in areas with weak soil and areas that need flood drainage such as the Central region and the Mekong Delta.
At the same time, it is recommended to amend Decree 26/2023/ND-CP on applying a 0% export tax rate on cement clinker.
The Vietnam Cement Association said that the increase in export tax, combined with the fact that clinker exports are not deductible for value added tax, has caused cement businesses to be unable to export their goods and have had to stop production.
In 2025, businesses only expect to promote public investment projects in infrastructure, especially transportation, housing, highway projects, airports, etc. In addition, the trend of building green buildings and developing renewable energy will be factors supporting cement consumption for growth.
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