Cost efficiencies now a must in construction

Dinh Quang Huy, chairman, Vietnam Building Ceramic Association

Before 2020, annual industry revenue reached $4 billion. But real capacity output fell by 55-60 per cent from 2022. The total export value in 2023 was $511.5 million, including $231.4 million of ceramic tiles, $164 million of sanitary ware, with raw materials and enamel frit the remainder.

In the first quarter of 2024, exports reached $110.5 million. In the first half of 2024, tile consumption reached 188 million sq.m of tiles. This is a significant setback for the industry.

The reasons are sources of raw materials such as clay and kaolin becoming scarce. Factories have almost no mines, so they have to collect and purchase raw materials in Hai Duong and Bac Giang provinces. The price of tiles and sanitary ware did not increase, but the price of raw materials increased, including lump coal, coal dust, and mine gas.

The real estate market has stagnated for a few years for many reasons, including problems in legal procedures, so projects have to wait for long days. So many industries are also stopped, and workers are unemployed, affecting social security.

To save the construction ceramics industry from trouble, the association recommended planning raw material areas, allocating mines associated with factories, grant investment certificates for upgrading outdated production lines, and not for new projects.

The government should approve the certification process for imported goods, allowing upstream inspection of imported ceramic tile products into the domestic market, like the certification process of Thailand and Indonesia with Vietnamese ceramic tiles.

It is necessary to send an inspection team, including representatives of our association and various ministries, to factories to check product quality before importing into the market. This upstream inspection is associated with customs records. The government and the Ministry of Industry and Trade should investigate dumping of imported ceramic tiles from India.

Nguyen Quang Cung, chairman, Vietnam National Cement Association

The cement industry, with an annual capacity of more than 120 million tonnes, is struggling with difficulties because supply is large, and domestic consumption and exports are all going down. Businesses have had to narrow production, revenues dropped dramatically, and many factories had to stop production and go into temporary bankruptcy.

Cement and clinker production output for 2023 was 92.9 million tonnes, equivalent to 75 per cent of the total installed capacity. Total consumption in 2023 was 87.8 million tonnes, equal to 88 per cent of 2022.

The real estate market has been quiet for a few years with very few projects, the residential construction segment was also less exciting. So, cement consumption in the domestic market reached less than 60 million tonnes.

Declining domestic and export cement consumption in Vietnam has caused cement inventories to increase. Many cement factories have had to reduce capacity or stop kilns, from dumping clinker in yards, affecting production efficiency.

Cement production and business from the beginning of the year have not been bright. In the first quarter of 2024, numerous businesses have reported losses for many consecutive quarters, including Vicem Ha Tien Cement, Bim Son Cement, and Vicem But Son Cement.

We sent a document to the prime minister, ministries, and agencies about Vietnam’s cement industry last year. In May this year, we also sent a document to the Government Office proposing amendments to Decree No.26/2023/ND-CP on a new schedule of export and import tariffs that defines cement clinker’s export tax rates at zero.

Because cement clinker is not a mineral resource, unless abolished, the 5 per cent export tax rate on clinker should remain.

Nguyen Thanh Tung, deputy general director Vietnam Cement Industry Corporation (Vicem)

Vicem is struggling with a series of major difficulties in cement production and business, stemming from a sharp decrease in market demand, both domestically and for export. This is the third consecutive year that the cement industry and Vicem has suffered a decline in consumption, causing a decrease in revenue and profits.

The cement industry is still affected by weak demand when the real estate market has not recovered, public ventures have been implemented slowly, cement supply far exceeds demand, and solutions using cement to reinforce and stabilise the ground have not been applied.

Export channels are also narrowing as China, the largest import market of Vietnam’s cement and clinker, is also strengthening exports. So it is hard for Vietnamese cement to compete.

Moreover, the export price of clinker is currently very low, only $31-32 per tonne (far from the price of $38-39 in the same period last year). Internal competition among domestic businesses is fierce, and some businesses sell at less than production costs.

With numerous burdens, Vicem’s production, consumption, revenue, and profit targets in the first half of the year were not met. All targets of production output, revenue, and profit report are worse than in the same period last year.

The market situation in the second half of the year is not expected to be bright, Vicem will pay attention to the management and maintenance of equipment to remain in production, reducing production costs of raw materials and fuel, repair costs of machinery and equipment, retail equipment procurement costs, saving energy costs, to improve performance.