Consumption in both domestic and export market fell
In the past 5 months, the consumption of cement and clinker continues to be affected by many internal and external factors.
In the domestic market - which absorbs over 60 million tons of cement and clinker per year - the disbursement progress of public investment is quite sluggish; many projects have to be delayed in implementation due to difficulties in capital..., making the output of cement enterprises difficult. It is estimated that domestic consumption in the first 5 months of the year decreased by 6% compared to the same period in 2022.
The export channel is not better. The difficult consumption situation in major markets such as China, Bangladesh, the Philippines... made Vietnam's cement output and export turnover drop to a record. Through 5 months, cement enterprises have just sold 13.65 million tons, worth 590 million USD, down 12% and 12.4% respectively over the same period last year.
After 2022, the consumption is not satisfactory, the production, sales and profit targets all decline. At this time, most cement enterprises are very impatient with the sales situation.
Sales director of The Vissai Cement Group confirmed: "It has never been as hard as sale job now. Consumption in May decreased by 30% compared to April and this June continues to face difficulties, especially many northern localities are entering the harvest season of agricultural products, so the demand for cement consumption is very low. Exports also followed the general decline of all sectors".
The number of new construction projects is very limited, real estate projects have not really flourished, causing cement consumption in many localities such as Ha Nam, Ninh Binh, Thanh Hoa, where has already been overproduction, now quieter.
According to data from the General Statistics Office, in the past five months, the number of newly established real estate businesses was only 1,744, down 61.4% over the same period in 2022. Meanwhile, the number of dissolved real estate enterprises was 554 units, up 30.4% over the same period last year.
The Real Estate Market and Housing Administration (Ministry of Construction) stated that since the beginning of the year, real estate businesses have faced many difficulties. Currently, many businesses have to change their business and management plans; Most enterprises have to restructure debts, restructure operations, and narrow the scale of production and business investment.
Consumption of cement through the residential channel is also very slow due to the difficult economic situation, many families temporarily postponed construction and home repair, directly affecting the sales activities of businesses in the industry.
Waiting for the highway projects
In 2022, the total cement consumption in the domestic market only reached nearly 63 million tons (equivalent to 2021), while exports reached 30 million tons (down 15 million tons compared to 2021). Cement consumption slowed down due to the down-cycle of the real estate market, plus the slow disbursement of public investment projects, which significantly affected the business performance of cement businesses.
Up to now, nearly half of 2023 has passed with the quiet in production and sale activities of cement enterprises.
Mr. Dinh Quang Dung, deputy general director of Vietnam National Cement Corporation (VICEM), said that input costs for cement production continued to increase when electricity prices increased by 3%, while coal prices remained high, so the production and business efficiency of enterprises is really affected.
"With this situation, the 6-month business results cannot reach the appoved targets, not consuming all production capacity, inventory in cement, clinker will increase a lot" the VICEM representative forecasted.
In fact, since the end of 2022, facing unfavorable market movements, some cement plants have reduced their capacity, and at this time, more cement factories must stop or reduce their production capacity.
In addition to the problem of difficult consumption and increased production costs, businesses are also worried that the power cut will severely affect production and sales activities.
“What we are most worried about is the lack of electricity, which leads to rotating power cuts. Ninh Binh has cut off electricity alternately, there are days when the power is cut for about 3-4 hours, production stops and more seriously, we cannot export our products", a leader of a cement factory in Ninh Binh shared.
Source: Investment Review Newspaper
