Vietnam 1H domestic cement sales contract, exports flat

Total Vietnam cement sales, including domestic and export, for June amounted to 7.344Mt, down 6.7 per cent MoM from 7.873Mt in May, and down eight per cent YoY according to the Vietnam National Cement Association (VNCA).

Domestic sales in Vietnam fell 5.4 per cent YoY to 5.029Mt compared to the 5.317Mt reported in May and were down five per cent YoY. Of the total, Vietnam Cement Industry Corp (VICEM) companies reported domestic sales down 12 per cent compared to a year earlier at 1.493Mt. Other VNCA-affiliated companies saw a six per cent YoY decrease to 1.036Mt, while non-VNCA members recorded a one per cent YoY decline to 2.5Mt.

Cement exports fell five per cent YoY to 1.783Mt. VICEM cement exports were up 90 per cent YoY to 371,872t. Other VNCA-affiliated companies saw cement sales rise 30 per cent YoY to 320,587t, while non-VNCA members reported a 24 per cent YoY decline to 1.091Mt.

Clinker exports contracted 35 per cent YoY to 531,858t in June. VICEM reported exports of 29,418t up 96 per cent YoY, while other VNCA-affiliated companies recorded exports of 37,708t up from zero in June 2023. Non-VCNA members saw clinker export sales drop 42 per cent YoY to 464,732t.

January-June 2024
In the first half of 2024, total cement sales amounted to 43.252Mt, down 2.1 per cent YoY from the same period of 2023.
 
Domestic cement sales were 27.488Mt, down 3.5 per cent compared to January-June 2023. VICEM companies reported a six per cent YoY contraction to 8.518Mt. Other VCNA members saw a 1.6 per cent YoY fall to 5.64Mt and non-members reported a 2.6 per cent YoY decline to 13.33Mt.
 
Cement exports from Vietnam were largely unchanged from a year earlier coming in at 10.28Mt. Cement exports by VICEM companies fell six per cent YoY to 1.4Mt, while other VCNA-members saw cement exports rise 59 per cent YoY to 1.785Mt. Non-member companies reported a seven per cent YoY contraction to 7.096Mt.
 
The Philippines, followed by the USA, Singapore, South Africa and Malaysia were the top five export destinations for cement in the first half of 2024.
 
Clinker exports were also largely flat compared to the same period last year, at 5.484Mt. Clinker exports by VICEM companies dropped 77 per cent YoY to 581,803t, other VCNA-affiliated companies reported a 24 per cent YoY decline to 217,371t, and non-members saw clinker exports slip one per cent YoY to 4.684Mt.
 
Bangladesh, the Philippines, Taiwan, Malaysia and Chile were the top five export destinations for clinker in the first half of 2024.
 
Outlook
Vietnam domestic cement sales disappointed in the first half of 2024, but the decline is notably less than that reported in the same period of 2023 (-21 per cent YoY), and while exports were flat in the 1H24, this is an improvement on the six per cent YoY fall recorded in the 1H23.
 
The Vietnam economy expanded 6.4 per cent YoY in the 1H24, with construction growing at its fastest pace since 2019. The government is targeting growth of between six and 6.5 per cent for the year as a whole, up from five per cent in 2023. However, highly-leveraged real estate developers, tight credit conditions and building inflationary pressures are hinderances to stronger economic growth and domestic cement sales. The rainy season is a further downside risk in the near term. An acceleration in the implementation of public investment projects is, however, an upside for domestic cement sales for the rest of the year. The government allocated VND657trn (US$26.8bn) for public investment in 2024, most of which targeting transport infrastructure projects.
 
Meanwhile, the sharp property market correction in China will remain a key downward drag on exporters, with exports to the country having dropped off a cliff. China was the key export market for Vietnamese clinker in 2022 and the third most important export market for cement in the same year. At the same time, China may look to export its surpluses, in direct competition with Vietnam. The VNCA has also called on the government to scrap the 10 per cent clinker export tax. Continued diversification of export markets will be important. Vietnam is well placed to continue increasing exports to the USA and Australia to take advantage of massive infrastructure projects there. Vietnamese cement and clinker sales into the USA rose 33 per cent in the January to April period, according to the latest data from the US Geological Survey (USGS).

Stronger exports and a revival in domestic demand is essential for cement producers who continue to face considerable excess supply. Indeed, VICEM recently noted that several production lines have temporarily halted operation. Vietnam is home to 93 cement production lines with a total capacity surpassing 145Mta.