Vietnam’s modernising cement industry
The transformation of Vietnam’s economic fortunes over the last 25 years has been one of the great success stories of southeast Asian development. Nowhere is this more apparent than in its built environment. Since 1990 cement demand has risen from just 3Mt to its level of 61Mt in 2017, making it the sixth-largest cement consumer worldwide.
Local cement demand continues to grow at a fast pace, with YoY demand for the first eight months of 2018 up nine per cent. Behind this growth lies a formidable appetite for residential construction, strong public works and booming tourism-related investments.
This rapid expansion of demand has been matched by a vigorous investment in domestic cement capacity, which has climbed to a hefty 118Mta and is mostly located in the limestone-rich northern regions. And this is where Vietnam faces a challenge – how to manage the supply-demand balance in such a way as to maintain a financially-viable and environmentally-sustainable industry.
The current solution is to export surplus capacity, an approach that has been very successful: over the 2010-17 period, Vietnam has exported over 100Mt of cement and clinker. This year it will again export a record volume of product, including a large quantity of clinker to Bangladesh and – of all places – China.
But future export demand is not guaranteed, given the accumulating regional surplus, making the country’s expanding surplus a source of concern. Therefore, Vietnam’s cement industry regulator, the Ministry of Construction, is in the process of drawing up long-term plans for the sector that will guide its development through to 2030.