According to FiinResearch’s Vietnam Cement Market Report 2020, after reaching the record growth of 16.4 per cent in 2018, clinker and cement on-year sales growth shrank to only 3.2 per cent in 2019 due to the slowdown in both domestic and export markets.
Particularly, Vietnam began a 14-day nationwide social distancing from 1 April, resulting in the suspension of the construction of residential, commercial, and hospitality projects in big cities. In fact, domestic sales of cement recorded an on-year decline by 5 per cent while the total clinker and cement export volume reached 6.6 million tonnes for the first three months of 2020, posting a sharp decrease by 17 per cent compared to the same period last year.
As a response to the negative impact of COVID-19, the government will provide the credit stimulus package of VND250 trillion ($10.87 billion) and fiscal stimulus package of VND30 trillion ($1.3 billion) to reduce to the negative impact of COVID-19 on the economy and support economic recovery after the disease outbreak. In addition, the government has committed to boosting public investment disbursement in 2020. On March 12, the government agreed, in principle, to convert three North-South Expressway projects which were initially planned to be executed under the public-private partnership (PPP) model into public investment projects to accelerate public fund disbursement and support economic growth.
FiinResearch assesses a moderate outlook for the domestic cement market thanks to the government's commitment to boost public investment packages in 2020 to reduce the COVID 19 impacts on the economy, as well as expected improvements in residential real estate with launches in the second half of the year thanks to the support from the local authorities to accelerate the licensing process as well as to solve other legal difficulties faced by property developers.
Meanwhile, cement export markets have a negative outlook due to limited demand from key export markets, especially China, Bangladesh, and the Philippines.
The report also pointed out that the designed capacity of the Vietnamese cement industry is expected to surge in the next four years thanks to the aggressive expansion by local private players including Tan Thang, Thanh Thang, Long Thanh, and Vissai. Especially, the year 2021 is expected to witness a significant increase in cement supply thanks to the completion of five large projects.
FiinResearch forecasts domestic cement sales volume to increase by 1 per cent in 2020 and follow 4 per cent CAGR in 2021-2030 thanks to the recovery of infrastructure development, as well as the residential, commercial, and industrial real estate segments in Vietnam.
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