Building materials set for rapid growth

Unbaked bricks produced at Thanh Phuc Mechanical Construction and Engineering Co in the northern port city of Hai Phong. The Ministry of Construction targets to reach US$2-2.5 billion from building material exports by 2020. VNA/VNS Photo Vu Sinh

In envisages that by 2020 the country will export 20-28 million tonnes of cement, 100-130 million tonnes of ceramic tiles and 6-7.5 million tonnes of granite tiles, 6-8 million sanitary products and 100-110 million square metres of glass. To achieve them the ministry will help the industry's exports become competitive, consolidate traditional overseas markets and seek new outlets for products like cement, granite tiles, porcelain tiles, and sanitaryware.

A ministry official, who asked not to be named, said the targets were predicated on the recent recovery in both the domestic building materials and construction industries.

In 2014 the building materials industry registered growth of 10.2 per cent and is expected to grow by at least 10 per cent this year.

Insiders admitted conditions were very favourable for the building materials industry to achieve its growth plans this year.

They were referring to the fact that many large construction projects are due this year in HCM City — like Vinhomes Central Park Tan Cang, The landmark, Masteri Thao Dien, the R6 Vinhomes Royal City, Vinhomes Riverside, and Imperia Garden.

A total of 169 transport projects are also scheduled to get underway this year, including some key projects like the Ninh Binh-Thanh Hoa-Vung Ang Expressway and Trung Luong-My Thuan Expressway.

Several factories and warehouses are set to be built across the country in anticipation of an economic recovery and increase in foreign direct investment flows.

Cement producers will have the opportunity to pare inventories and get decent prices because demand has tended to rise in recent times and new supply is limited.

As of the end of last year the country had 74 cement plants with a combined capacity of 77.35 million tonnes a year. Domestic market was 70.6 million tonnes after rising by 15 per cent, helping significantly narrow the gap between supply and demand.

This year demand is expected to rise by 3 million tonnes, helping reduce inventories.

In the construction plastics sector, competition is fierce. There are four major produces of construction plastics, all of them listed, namely Binh Minh Plastics (BMP), Tien Phong Plastics (NTP), Da Nang Plastics, and Dong Nai Plastics.

BMP and NTP, among them, account for 50 per cent of the market share.

To compete with them, smaller companies have had to increase commissions for agents and reduce prices if they want to bid for projects, affecting both their profits and the industry's growth.

The 40 per cent drop in fuel prices has been a boon for building materials producers, especially those that make plastic pipes and stones for construction since they are based in areas far away from the market.

Analysts said major building materials producers with wide distribution networks, good management and the ability to expand production could develop further and expand their market share since demand was rising again.