"Clogged" output
According to the Vietnam Cement Association, in the first 6 months of 2024, only 44,600 tons of cement and clinker were exported to the Chinese market, bringing in less than 1.57 million USD in foreign currency, while in the first half of 2023 it was more than 24 million USD.
Last year, China, once a key export market for the cement industry, reduced imports by 90% due to weak demand stemming from the country’s real estate sector’s difficulties. Not only that, this country also boosted cement exports to Vietnam’s main cement import markets, making price competition in the export market more fierce.
Statistics on the export situation in the first half of this year show that the whole country exported 15.9 million tons of cement and clinker, earning nearly 612 million USD, up 0.1% in volume and down 11% in value compared to the same period in 2023. Before facing difficulties from fluctuations in the Chinese market, the competitive outlook of the cement industry had been predicted many years ago.
Difficulties piled on top of difficulties when recently, the Department of Trade Remedies - Ministry of Industry and Trade (PVTM) received information that Taiwan (China) had officially initiated an anti-dumping investigation (CBPG) on cement and clinker originating or imported from Vietnam.
Accordingly, the investigated goods are cement and clinker classified under Taiwan's import commodity codes 2523.29.90.00.2 and 2523.10.90.00.3. The requesting party is the Taiwan Cement Manufacturers Association. The initiation date is August 8, 2024; the anti-dumping investigation period is from July 1, 2023 to June 30, 2024. The alleged dumping margin against Vietnam is 16.99%. The Department of Trade Remedies said that the plaintiff named 7 Vietnamese enterprises, in addition to other enterprises that also export the investigated goods to Taiwan.
It can be seen that weak demand, competitive pressure at home and abroad, and diversified profits have made the "health" of cement enterprises gloomy in the first half of the year. Many enterprises have had to stop kilns due to difficult consumption or lower product prices, adjust the capacity of kilns and working hours of workers, even though they have to accept a reduction in profits to save money and prevent waste in production and business.
For example, in Nghe An, according to the report of the Department of Industry and Trade, the province currently has 4 cement factories in operation with a designed capacity of 7.8 million tons/year, including: Hoang Mai Cement Factory 1.4 million tons/year; Song Lam Cement Factory 4 million tons/year; Song Lam 2 Cement Factory: 0.6 million tons/year; Tan Thang Cement Factory: 1.8 million tons/year.
Two projects are being implemented by the investor: Song Lam Cement Plant Phase II, with a capacity of 3.8 million tons/year and Hoang Mai 2 Cement Project - Phase 1, with a capacity of 2.3 million tons/year. However, due to some problems and difficulties, the implementation progress is slower than expected (currently on hold).
From 2019 to present, the production, business and consumption situation of cement factories in Nghe An province has decreased sharply. Currently, Song Lam 2 Cement Factory has stopped operating continuously for 3-4 months/year, Tan Thang Cement Factory only operates the kiln at about 37% of the set plan...
Need effective solutions
According to statistics at 18 cement enterprises on the stock exchange, in the first half of 2024, these enterprises suffered a pre-tax loss of nearly 110 billion VND, 3.4 times higher than the same period last year.
Industry experts believe that the real estate market has not shown signs of strong recovery. Slow-moving projects have had to delay or postpone their progress due to difficulties in capital sources, disbursement of public investment capital is not really high; the scarcity and increase in prices of construction materials (sand, stone, gravel) have affected construction progress in many areas, especially in the Central and Southwestern regions, causing domestic demand for cement to plummet.
Meanwhile, fossil fuel resources are increasing and becoming scarce, such as silicon oxide, iron oxide, and basalt additives. Prices of coal, oil, ash, additives, etc. are increasing, but selling prices are not increasing, and even decreasing, making it difficult to compete. Supply and fuel prices are unstable at times, affecting production and business results.
The use of alternative fuels and raw materials is still problematic, and there are no specific guidelines for using industrial waste sources to replace raw materials in production. Cement consumption demand has dropped sharply, and factories have had to accept adjusting selling prices according to fluctuations in production costs for some product lines and specific projects to maintain operations.
In the coming time, the Government will conduct an inventory of greenhouse gas emissions, the carbon emission market will be applied, putting great pressure on the cement industry. Investors and consumers are increasingly aware of the importance of greening in production, which is using alternative fuels, utilizing excess heat, treating waste, etc., moving towards increasing the rate of using alternative fuels to replace coal.
The representative of the Vietnam Cement Association shared that the price of each carbon credit in Europe is quite high, up to more than 90 USD/ton of CO2, so if taxed, this will be a very heavy burden for businesses. Therefore, businesses need to soon have green conversion solutions to cope with the tax. Green conversion in cement production is often reducing the content of clinker (the main ingredient of cement), reducing emissions during the clinker burning process or reducing electricity consumption in production.
However, reducing the clinker content is very difficult because no customer wants to buy cement with less clinker. Therefore, enterprises need to focus on reducing emissions during the burning process or reducing electricity consumption during the production process.
Mr. Tanakorn Theeramankong - Deputy Country Director of SCG in Vietnam said that the company has launched a "green cement" that reduces 20% of carbon emissions during the production process compared to conventional cement. The product uses biomass fuel in the production process to replace fossil fuels and increase the proportion of renewable energy sources.
The company also installed Waste Heat Recovery systems throughout its factories to reduce carbon emissions from the cement production process. Thanks to these initiatives, each ton of SCG Low Carbon Super Cement (green cement) contributes to reducing carbon emissions equivalent to the CO2 absorption of 12 mature trees within a year.
Source: https://kinhtedothi.vn/thi-truong-xi-mang-tiep-tuc-kho-khan.html
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