Material suppliers sense profits in public investment endeavours

October 22, 2021 | 15:00
Construction companies are looking into new efficient methods to overcome this years’ woes, with disbursement acceleration of public investment a top focus.
Construction companies in cement, steel, and more are looking to snap up additional market share, Photo: Le Toan
Construction companies in cement, steel, and more are looking to snap up additional market share. Photo: Le Toan

In a recent report, BIDV Securities Company stated that accelerating the disbursement of public investment is an opportunity for a series of related industry groups to benefit from, of which the most direct advantage could play into the hands of building material businesses, such as for cement and steelmakers.

Petrolimex Petrochemical Corporation JSC, which currently accounts for about 30 per cent of the asphalt market share, is expected to reap some benefits thanks to public investment projects such as the North-South Expressway, upgrades at Noi Bai and Tan Son Nhat international airports, and La Son-Tuy Loan Expressway.

“The asphalt segment could be the company’s main growth driver this year as it is benefiting from the upcoming public investment projects,” noted the report.

Nguyen Hoang Ngan, general director of Binh Minh Plastic JSC, stressed that the benefits of building material manufacturers “depend on mostly actual disbursement, not the plans.”

Nguyen Quang Cung, chairman of the Vietnam Cement Association (VCA) said, “Around 104-107 million tonnes of cement would need to be consumed this year.”

Finance director Colin Terry of INSEE Vietnam told VIR, “Our long-term strategies remains largely unchanged as we foresee the market progress backed by vaccine rollouts. We continue to ensure that we have diversified sources of key material and equipment supplies, as well as stay flexible in our operating model to be ready to support our customers as opportunities and volumes scale up again.”

As one of the largest cement companies in Vietnam, INSEE can fall back onto large capital and tech, and its products have been used in iconic buildings and infrastructure projects across the south of the country.

Cung of the VCA warned, “Public investment will partly increase the demand for cement in the future, but the cement market here remains risky amid export tax, oversupply, and increased prices of raw materials.”

According to the Ministry of Construction (MoC), construction materials account for 60 per cent of investment costs for most projects. Specifically, in highway projects, the cost of asphalt accounts for 35 per cent, steel for 30 per cent, and cement for 15 per cent. Businesses operating in this sector will benefit from the government’s push for public investment.

Meanwhile, the prospects of the steel industry have helped Hoa Phat Group continue to maintain its leading position in the industry. According to the company, this year will see the construction of the $3.7 billion Dung Quat 2 Complex.

The domestic steelmaker aims to produce eight million tonnes of crude steel to continue to lead the national market share in construction steel and pipes in 2021.

A representative of Hoa Phat Group also shared examples of public investment projects across the country that used the the group’s steel for construction, such as Vinh Tuy Bridge in Hanoi, the North-South Expressway, and My Thuan 2 Bridge, among others.

“For the North-South Expressway, Hoa Phat’s steel has been supplied in a series of bidding packages. In June, the construction contractor for My Thuan 2 Bridge ordered steel that was then delivered in July and August. According to our evaluation, there are very few competitors in Vietnam capable of producing and supplying such high-quality steel,” the representative claimed.

Minister of Construction Nguyen Thanh Nghi said that the industry is accelerating the disbursement progress of public investment, in which investors commit to the progress according to the monthly schedules. The ministry aims to complete its entire capital plan this year.

By Thy Nguyet

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