VIETNAM: Ailing cement industry needs to export more

HA NOI — Exports were a main outlet for the ailing cement industry last year, Nguyen Thanh Tung, director of Viet Nam Cement Corporation's administration office, said at a recent conference.

The industry faced many difficulties last year in part due to the stagnant real estate market.

This year, about eight new cement factories will go into operation with a combined capacity of 6.9 million tonnes, bringing the country's whole capacity to 73 million tonnes.

According to the Viet Nam Cement Association, the total demand for cement this year will be about 60 million tonnes, of which, 53 million tonnes will be for local consumption and the remainder for export.

Under the Ministry of Construction' rules, joint ventures will have to export 30-40 per cent of their total output.

In fact, China is the largest importer, accounting for half of the world demand. India is the second importer. Cement demand in some Asia Pacific nations are also rising - and Africa is also becoming a promising market.

Industrial analysts said Viet Nam should take advantage of these needs, despite the low value and high cost of transportation. Cement could also be difficult to store.

In addition, the country's poor infrastructure is also limiting efforts to further increase cement exports. Rising input costs related to fuel, power and coal during 2011 also created significant challenges for the sector.

Higher costs push prices up. For instance, clinker used in cement making may hit to more than US$40 per tonne compared to $36 previously. Exports of cement to Africa and Latin America require vessels capable of carrying more than 50,000 tonnes.

Nguyen Van Diep, also from Viet Nam Cement Association's administration office, said tight co-operation was needed between the ministries and State bodies to map out export strategies.

He said the Government should create favourable conditions for enterprises to borrow capital, cut costs and attract more foreign investors in a bid to raise competitiveness, he added.

Analysts suggest there is a big export market in Africa because its infrastructure is poor and demand for cement is rather high. To tap into this market, firms had to promote products more professionally.