Cement export regulations build solid foundation

While demand is forecast to exceed the supply in the north and cement producers have turned to export ventures, the southern market still needs 3.5-4 million tons. The Ministry of Construction has begun to tackle such industry dilemmas.

According to Nguyen Van Thien, Chair of the Vietnam Cement Association, total cement output for 2010 will reach 55 million tons, while design capacity is 70 million tons, and total consumption will be 50 tons. In theory, Vietnam’s supply should be profuse, but the southern market will lack around 3.5-4 million tons.

Thien explained that companies really want to bring concrete southward but there is no place to gather the products, no transit ports, and ships are difficult to charter. Southern enterprises always want prompt delivery at any time they set, which import products can do perfectly.

In the first six months of 2010, southern provinces have imported nearly 1.5 million tons of concrete and purchased some 300,000 tons from northern factories. From now to the end of 2010, southern companies will still need 2-2.5 million tons more.

To reduce imports and settle the north-south transport problems, Thien thinks it is necessary to set up a firm in charge of collection at northern factories and gathering products at depots and ports, possibly Cai Lan port in Quang Ninh province. The company can then transfer the concrete to big tonnage ships to carry the products southward.

Regarding cement overproduction, Thien noted that oversupply has been caused by slow development of the construction market, which does not keep pace with the construction materials industry. Also, investment in the cement industry has been too heated in the past, as many sought to invest in the field.

Thien denied that cement output is alarmingly abundant. “The abundant volume is not considerable and still controllable,” he asserted.

The Ministry of Construction recently agreed to install technical barriers to restrict cement imports, a good way to protect domestic production and one that has been used by many other countries. Thien acknowledged, however, that technical barriers are not easily implemented without violating WTO rules.

To deal with overproduction, the Ministry of Construction sent a dispatch to some cement producers, namely Nghi Son, Chinfon Hai Phong and Phuc Son, urging the companies to export 100,000-150,000 tons in the last half of 2010 and plan to export 50 percent of their output in 2011. The ministry has also requested the companies to export 100 percent of their cement output from 2012 onward.

The investment licenses of cement joint ventures clearly stipulate that they must export 30-40 percent of their cement.

Tags: Vietnam cement, Vietnam cement exports, Vietnam cement industry