Excess cement prompts production check

Sunday, Jun 02, 2013 08:25

The output of cement production suggested in the long-term plan will far exceed domestic demand.—File Photo
HA NOI (Biz Hub)— The Ministry of Construction has recommended the Government cancel many pending cement production projects and delay a number of others in order to align more closely with market demand.

In a report on the cement industry sent to Deputy Prime Minister Hoang Trung Hai this week, the ministry suggested the removal of nine planned cement plants, with an expected total output capacity of 4.15 million tones, from the nation's Cement Industry Development Plan during 2011-20, which was approved by the Prime Minister a few years ago.

They also suggested that the construction of another seven cement production projects, which would produce a total of 9.73 million tones annually, be delayed until 2016.

The nation's development plan for the industry was designed to accommodate yearly growth of 10-15 per cent, matching the rising rate of the industry in the period 2006-10.

However, according to the ministry, the output suggested in the long-term plan will far exceed domestic demand in the next two years, which has fallen due to the country's economic difficulties.

Demand fell by 15 million tonnes in the last two years from the output stated in the plan, but despite this new cement production plants have continued to be developed, causing an excess which will reach 25 million tonnes by 2015. The redundant figure would rise to 40 million tonnes by 2020 when the sector is producing 129.5 million tonnes.

Chairman of the Viet Nam Construction Materials Association Tran Van Huynh said last year was stormy for cement businesses and the situation does not look to improve. He warned that if no drastic changes are made, more Vietnamese cement companies will face the prospect of bankruptcy.

The association's statistics showed that last year alone, coal and power prices surged 10 and 20 per cent respectively and prices of some other input materials also increased by more than 7 per cent. Compounding things further is the falling demand for cement, causing many plants to post losses and consider closing their doors, he said. — VNS

Comments (0)