Expectations for the fourth quarter

Cement consumption in the domestic market in the third quarter of 2021 has decreased deeply due to the influence of Covid-19, many provinces and cities have implemented social distancing, large works and projects have been frozen, only reaching 11.77 million tons, down 23.7% over the same period in 2020. Of which, Vietnam Cement Corporation (VICEM) consumed 3.96 million tons, down 2.96% over the same period and only 71.5% compared to its budget.

Consumption and prices fell deeply, causing the production and business results in the third quarter of 2021 of most cement enterprises to be severely affected. But Son Cement Joint Stock Company stated that in this quarter the company achieved revenue of 657.3 billion VND, down 14.5% compared to the third quarter of 2020; negative profit of 7.6 billion VND. Accumulating 9 months, the company still made a profit of 25 billion VND, but decreased by nearly 48% compared to the same period last year.

A big cement company in the south, Ha Tien 1 Cement Joint Stock Company, suffered the heaviest losses in this epidemic. Consumption in the third quarter of 2021 decreased by 55% over the same period, so the company's net revenue decreased by 48%, to nearly 1,039 billion VND; loss after-tax is nearly 20 billion VND (the profit in same period last year was 148 billion VND).

Mr. Pham Van Bac, Director of the Building Materials Agency (Ministry of Construction) forecasted that domestic cement consumption would be expected to increase again when the epidemic would be gradually controlled, construction activities recovered, construction works were restored and construction sites reopened. Export should be also very favorable because China increased imports of many types of materials, including cement, clinker, iron and steel, creating more output in the last months of the year for cement industry.

Consumption for the whole year will reach 100 million tons of cement

The domestic market continues to be the main consumption area of the cement industry, but the gap with the export channel is shrinking. In 2020, due to the impact of the pandemic, domestic consumption decreased by 3 million tons compared to 2019, reached 62.1 million tons only, but thanks to a strong increase in exports with 38 million tons, the cement industry still achieved sales target, consumed over 100 million tons of cement.

Earlier this year, VCBS Securities Joint Stock Company forecasted that cement growth in the domestic market would reach 4%. If this increase is achieved, domestic consumption will only approximate the level of the peak year 2019 (nearly 65 million tons).

The annual report of the cement industry in 2020 published by the Vietnam Cement Association (VNCA) stated that the domestic consumption market of the industry was slowing down. This is clearly seen when looking at the consumption structure in recent years. In 2018, domestic consumption reached 63.94 million tons, exports 32.08 million tons. The corresponding figures in 2019 were 64.91 million tons and 34.09 million tons, in 2020 were 62.12 million tons and 38.02 million tons. Under the heavy impact of the epidemic, it is very difficult to keep this year's consumption volume equal to 2020's.

However, in general, cement consumption still has growth because the export channel has increased sharply. In the past 9 months, the total volume of both domestic consumption and export have reached 79 million tons (about 46 million tons for domestic consumption and 32.7 million tons for export). With the general recovery of the economy and construction investment activities being accelerated, this industry is forecasted to reach the consumption amount of 104-107 million tons in 2021. 

                                                                                         Source: VietNam Investment Review