Less production, steel, cement stock down

The volume of unsold cement products is now two million tonnes, down nearly 800,000 against June, equal to a 15-day output, according to the Vietnam Cement Association.

Nguyen Van Thien, chairman of the association, told the Daily that only 31 million tonnes of cement was consumed locally in the first eight months of the year, dipping 8 per cent year-on-year.

“Cement inventory is no longer a concern, but it has become a disappointment, pointing out that several factories have suspended or scaled down their production due to the poor market demand,” said Thien.

Some cement plants that have cut down production are Hoang Thach Cement, currently operating two out of the three production lines, and many Lang Son-based factories with a daily capacity of around 1,000 tonnes having halted production as the producers failed to find outlets for their products.

“It is difficult to give a forecast for the cement industry in the coming time. However, while 49 million tonnes was consumed in 2011, the industry only targets a consumption volume of some 47 million tonnes this year,” said the chairman.

The Vietnam Cement Association and the Ministry of Construction are reviewing cement projects nationwide to reorganise the industry, with an intention to align the cement output with the current market demand.

Under the current planning, cement production capacity will reach 90 million tonnes in 2015, while demand is 75-76 million tonnes, said chairman Nguyen Van Thien.

Cement consumption in 2012 is estimated at 48 million tonnes. With annual growth of 5-10 per cent, consumption would only reach some 60 million tonnes in 2015, much lower than the forecast given in the planning.

Meanwhile, in a report on steel production in the first eight months of 2012, the Vietnam Steel Association (VSA) said construction steel inventories amounted to 316,000 tonnes as of end-August. In the first eight months, nearly three million tonnes of construction steel was produced, down 10.2 per cent over the same period last year.

As for steel pipe, VSA said local makers are in a fierce competition as supply exceeds demand. Only around 19,000 tonnes of steel pipes is now in stock, because producers have cut back on production.

The report pointed to a drastic drop in output of building materials in the first eight months. Specifically, steel and iron production fell 5.1 per cent; stone, sand, gravel, clay and kaolin extraction slid 21.8 per cent; concrete and cement production went down 12.9 per cent; and production of materials made from clay dipped 6.5 per cent.

“As long as the property market is still frozen, building material industries, including steel, will suffer the same fate. These problems cannot be solved in a short time, so building material industries in general and steel in particular will further struggle to survive,” VSA said in a statement.