Transcript Cement industry of Vietnam Status and Prospective

Cement industry of Vietnam
Status and Prospective
(Paper for CMT’s 9th Asia Cement Markets
conference)
19-20th April 2007 Hanoi, Vietnam
Presented by Chairman of VNCA
NGUYEN VAN THIEN
 In building and developing economy, industrialization and
modernisation of Vietnam, cement industry is considered
one of the important industries.
 During 5 year plan 2001-2005, cement industry has
developed rapidly and strongly. In 2001, cement demand
has reached 16.7 million tons; in 2005, nearly 29 million
tons. Growth rate during 5 years is 10.40%. In 2006,
demand increased to 32.5 million tons.
 Growth rate for 5 year plan 2006-2010 will be about 10.5011.50%, and the cement demand by 2010 will be about 50
million tons.

I. INVESTMENT IN DEVELOPING CEMENT
INDUSTRY DURING 1996-2005.
To meet the above-mentioned estimations over
recent 10 years (1996-2005) cement industry in
Vietnam has continuously developing and modernising
considerably in terms of technology, dimensions and
structure.
Most current cement factories use dry method
of technology. Except small vertical shaft kiln cement
factories with backward technology and equipment, all
rotary kiln cement factories have capacity of 1.4 to 2.3
million tons/year with the same level of technology and
equipment to those of other cement industries in the
South East Asia.
 Regarding ownership structure, except cement joint
venture companies with foreign partners, state owned
cement factories are gradually moving to become joint
stock companies and some private enterprises have
emerged.
 Over last decade cement industry has contributed about
10-12% GDP of all industries and gradually has met the
cement demand in contruction and national economic
development.
 Facing the demands of international integration and
development Vietnam cement industry will have to confront
many new challenges. Thus, evaluation and analysis of the
status of Vietnam cement industry are necessary for
development investment plan in the coming period.
 Data shows that cement production has increased
4 times during 10 year period beginning with 7.40
million tons in 1995 to 29 million tons in 2005.
 In general, investments in and development of
cement industry over recent decade have been
correct in terms of directions and methodologies;
appropriate in scale and rate and corresponding
with national economic development growth.

OUTLOOK FOR VIETNAM CEMENT
INDUSTRY IN THE PERIOD OF 2006-2010.
Based upon the socio-economic targets
approved by Vietnam National Assembly for the
period of 2006-2010 which are as follows:
–
–
Average GDP growth rate: 7.5%/year.
Average GDP per capita in 2010: US$1080.
–
National population in 2010: 88 million.
 Synthesis of calculations indicates that yearly average increase of
cement demand during 2006-2010 is 11% and demand forecast in
2010 will be about 50 million tons.
 At the end of the year 2006 total designing capacity in the country was
26.70 million tons of cement (excluding the cement grinding stations).
At present about 30 cement projects are being built with total capacity
of 35 million tons of cement. Accordingly by 2010 Vietnam cement
industry will have total designing capacity of about 60 million tons to
meet well the expected demand of 50 million tons.
 Investment prospective is constructive and favourable in general.
However, facing the economic changes in the region and in the world
and adapting to our economic integration, special attention should be
given to Vietnam cement development investment during the period of
2006-2010
1. It is necessary to develop the transport and
communication in sync with cement projects,
especially the sea and land transport. Following
preliminary calculations at present, annual
transportation of clinker and cement by sea from
the North to the Central and the South is about 3
million tons, but by 2010 the transportation
volume of them by sea and river from the North
to the South will be increased to 5-6 million tons.
2.There should be radical and active
measures to protect environment and
ecology at factories and vicinity areas,
especially the factories having been
operational before 2000 need measures to
up-grade smoke and dust filtering system to
meet criteria of Environment Law.
2. By 2010 there will be totally 40 rotary kiln
cement factories (capacity of each from 1 to 2
million tons/year) put into operation (excluding
vertical shaft kiln cement factories and small scale
cement grinding stations). Especially in some
provinces such as Hanam, Ninh Binh, Thanh Hoa,
Hai Duong, Quang Ninh… there will be cluster of
cement factories. For those localities transport,
communication, environment polution are issues
to be treated immediately from now on.
4. Another most important problem to Vietnam
cement industry for the time being is to enhance
the competitiveness. This issue should be taken
into consideration right from the outset of
preparation for investment decisions covering
technology, equiment, investment rates, profits,
production cost, sale price, product consumption
possibilities, capital recovery plan etc. These are
the basic elements to be decisive to plants after
construction and entry into operation which can
be competitive enough with, first of all, local
cement factories and then, imported cement.
 As I have mentioned above, the Vietnam domestic demand
for cement in the year 2006 was 32.5 million tons, an
increase of 12% compared with the previous year.
 Demand increase is a good condition for cement
manufacturers but the upsurge in the price of most input
materials is a bad one for them. In the year 2006 the
soaring of price of oil and petrol, imported clinker, PVC
bag, freight charge ect resulted in cement production cost
increase and consequently the cement price has risen 2
USD per ton on average in the South and 1 USD per ton
on average in the North. At present the average delivered
price of bagged cement in the South is 60 USD per ton and
respectively in the North is 50-51 USD per ton.
 This 2007 year the domestic demand is
expected to be from 35 to 36 million tons, an
increase of 10% compared with last year.
 To produce 36 million tons cement of all
kinds, there will be a need for about 4 million
tons of imported clinker. However, the
importation of clinker will be gradually
reduced year by year due to new projects
would come on stream.
 Before I conclude my paper may I wish all of
you good health, successes, happiness; and
good success for our conference.
 Thank you.
Presented by Nguyen Van Thien
Chairman of VNCA