Demands for local building materials in Jan-July have strongly tumbled, prompting the industry to cut forecast consumption for the whole year further.
The cement industry in the first seven months has produced only 24 million tons, and it is estimated that consumption this year will total only 48 million tons, said Nguyen Van Thien, chairman of the Vietnam Cement Association. This proves further contraction compared to the 50 million tons consumed in 2011 as recorded by the Ministry of Construction.
Thien told the Daily this volume is quite dreary compared to the industry’s total designed capacity of 70 million. Thien said the cement sector in the first seven months has adjusted its production target three times due to poor demands.
The sector in the year’s beginning set a production target of 65 million tons but it later had to revise down the target to 60 million tons before pulling it down further to 48 million tons as a result of stagnant consumption.
Despite lower prices than in previous times, sales volume of cement products still remains low. Now cement makers are trying to save themselves from the lamentable situation by adjusting down production volume, launching numerous promotions and boosting exports at the same time.
The cement industry in Jan-July has shipped abroad about four million tons and this number is expected to amount to around seven million tons in 2012, Thien stated. However, he noticed export prices are dipping, especially to neighboring importers, so this will cut into local exporters’ profits.
It is noted that a large number of cement manufacturers have heavily invested in production lines, mostly with bank loans, he stressed. This means the fact that many plants adopt solutions to scale down their production will make it more difficult for them to service bank loans, he clarified.
Similarly, steelmakers are also facing the same woe, with no signals of a foreseeable recovery of the market in the near future. Steel consumption volume in the first seven months only reached 2.6 million tons, down up to 10.6% year-on-year as observed by Pham Chi Cuong, chairman of the Vietnam Steel Association.
But Cuong asserted there is still room for the steel industry to export US$2 billion worth of two million tons like last year even though other nations are racing to protect their own steel sectors. He predicted total output of the construction steel industry this year will be lower by some 10% year-on-year because the deployment of real estate projects still remains late given financial constraints.
The Saigon Times Daily