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Internal difficulties in the Cement industry are due to supply exceeding demand. Currently, the country has 58 factories, with 83 lines, design capacity of 112.5 million tons/year. But due to the application of in-depth renovation, the actual capacity can reach nearly 120 million tons/year, while social cement consumption decreases by 16.9%, compared to 2022.

Resolve the surplus by exporting cement, but in 2023, although exporting 31.3 million tons, equal to 99.5% compared to 2022, the export price of cement and clinker (FOB Quang Ninh) decreased sharply compared to the end of 2022. Specifically, cement prices decreased by 5 – 6 USD/ton, clinker prices decreased by 9 – 10 USD/ton.

In addition, force majeure factors related to the prices of raw materials, fuel, and input materials for cement production, although they have decreased, are still at high levels.

Associate Professor Dr. Luong Duc Long, General Secretary of the Vietnam Cement Association, said that during this period, the cement industry is under great pressure, when the domestic economy’s ability to absorb cement is poor. The prices of electricity, coal and other input materials for production all increased, at one point the price of coal increased 3 times; In 2023, the average retail price of electricity will increase by 7.5%… On the other hand, domestic cement businesses are facing a disadvantage when the clinker export tax increases from 5% to 10%, from January 1, 2023. 2023, the value added tax law will not be applied.

All of these difficulties push the cement industry into a difficult position and dilemma. If a business is not competitive enough, it will have to stop without change. Some factories with large investment loans and lots of bank debt may go bankrupt or have to be sold off to foreign countries. Up to now, 8 cement production lines have had to stop operating, many factories have had to stop 1 or 2 lines to reduce cement inventory.

According to calculations by the Vietnam Cement Association, in 2023, the country will produce and consume nearly 88.6 million tons of cement and clinker, reaching nearly 79% of the production capacity of 83 lines, about 70% of the capacity. reality. Domestic cement consumption in 2023 reaches 57.083 million tons, equal to 84.3% of domestic consumption in 2022.

Each business will have to have different solutions and strategies to overcome difficulties and challenges in the current period. But a common solution implemented by many large cement enterprises is innovation, moving towards green production and saving resources. This is also the inevitable direction of the cement industry in the future, towards green production and circular economy.

According to Mr. Dao Nguyen Khanh, Head of Sustainable Development and Communications Department of Insee Vietnam, Insee Vietnam chose the solution of promoting technological innovation and optimizing production costs. Insee Vietnam’s leadership decided to stop 1 grinding station to optimize costs, while increasing waste treatment and increasing heat replacement rate. Insee Vietnam’s Hon Chong crushing station reached a new record, greatly reducing costs and variable costs.

Or Vicem is the largest cement enterprise in Southeast Asia, playing a leading role in stabilizing the Vietnamese cement market. During this period, Vicem focuses on innovation, cost savings, increasing the use of waste as alternative fuel, using waste sludge to replace clay, using artificial gypsum to replace natural gypsum. course; Researching new products to reduce emissions into the environment, contributing to reducing production costs, protecting the environment, and reducing the use of non-renewable resources.

Another solution chosen by many cement businesses is to reduce costs, restructure the business, and focus on digital transformation and digitization in production and business.

It is estimated that in 2024, domestic cement demand will hardly grow high. Disbursement of public investment capital in localities is still slow, due to problems with legal procedures, site clearance… The real estate market will recover but cannot be vibrant again right away. Besides, cement supply continues to exceed demand, a number of new lines can go into production such as: Vissai Dai Duong 2, Xuan Son Cement…

Cement and clinker exports are forecast to continue to face difficulties because the Chinese real estate market has not shown signs of recovery; China’s cement surplus will compete with Vietnamese cement in markets such as the Philippines, Central America, South Africa… In addition, from October 2023, Europe will begin implementing a regulation mechanism. Adjusting the carbon border for imported cement will be a big challenge for businesses exporting cement to Europe.

According to Associate Professor Dr. Luong Duc Long, General Secretary of the Vietnam Cement Association, the cement consumption market in 2024 will be better than 2023, because our country is in the process of building infrastructure, so demand for There’s still a lot of cement. With the determination of the Government, especially the Prime Minister, it is hoped that in 2024 the speed of disbursement of public investment capital will be better.

The usual rule is that GDP growth and cement growth lines move together; This means that as GDP increases, cement consumption will increase. Domestic cement consumption growth from 2013 to 2023 (arithmetic average) only reaches 2.35%, while average GDP growth during this period is 5.71%. Thus, in the past 11 years, the growth rate of Vietnam’s domestic cement consumption has been low.

To help the cement industry overcome current difficulties, Dr. Nguyen Quang Hiep, Deputy Director of the Construction Materials Department, said that in addition to accelerating the implementation of public investment projects, building infrastructure, and removing difficulties for the real estate market; Accelerate investment in building 1 million social housing units. Regarding tax policy, we recommend that the Government postpone the increase in clinker export tax from 5% to 10% and temporarily keep the clinker export tax rate at the old level of 5%. % for 2 more years. At the same time, it is recommended that the Government consider and amend the value-added tax policy for exported clinker products, in the direction of producing exported clinker that is not subject to goods not subject to value-added tax.

Representatives of the Vietnam Cement Association proposed to urgently promulgate standards and regulations on the use of alternative raw materials and fuels for industries, including the cement industry. There are tax and financial incentive policies for factories using alternative raw materials and fuels. Create conditions for convenient transportation and reuse of waste and garbage as raw materials and alternative fuels. It is necessary to issue regulations and instructions for cement factories to inventory and report greenhouse gas emissions

Source: Vietnam Cement Newspaper

Supas Vietnam Daily 2023

Collector: Elly Nguyen

Sales Manager of Supas Vietnam

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