Cement companies to seek opportunities in difficulties

With reduced consumption, large inventories, increased input price and decreased selling price, many cement companies have made efforts to seek opportunities for themselves.

Difficult economy, frozen real estate market, strongly increased bank interest rate and “shocks” caused by strong increase in input expenditures (coal, electricity and oil) result in the gloomy cement market in the recent years. Another important reason was that strong investment and design capacity and production capacity exceeding demands lead cement redundancy.

As a consequence, for 20 past years, this was the first time cement consumption had been reduced in 2 consecutive years. As estimated, in 2012, Vietnam consumed 46 million tons cement (a 5% decrease on 2011). Previously, there was a 1% reduction in 2011 compared to 2010. This led no growth or insignificant growth of the large and small size cement companies and private or joint venture cement company.

According to the experts, cement consumption in 2013 is expected to be equal one in 2012, in which cement production and supply for the market increases about 72 million tons. Under the statistic figures of Vietnam Cement Association, total domestic cement consumption in 2/2013 was 1.67 million tons, a 50.7% decrease on 01/2013 and in comparison with the same period last year (a 49% decrease). Inventories at the end of month were 0.85 million tons cement and 2.27 million tons clinker.

“This shows that cement consumption has no prosperous and satisfactory signs in 2013. Upon higher supply than demand lasts up to 2020, handling difficulties of the cement companies is a problem. Thus, competition between the enterprises is violent and it requires initiative and flexibility to take measures to restructure and enhance competition in the market”, analyzed a member of Vietnam Association for Building Materials.

As forecast, with about 100 cement trademarks in Vietnamese market and market shares distributed in different regions (max. 9% nationwide and min. 1%), the cement companies compete violently and race against one another for promotion and discount.

Facing with market pressures, many cement plants have “carried on their shoulders” to confront, but many companies run the risk of being wound up, or acquired by other enterprises. Not only the enterprises in weak group, but also the strongest enterprises meet obstacles.

Different path

However, according to the experts, in the context of dull cement consumption and large inventories, in fact, some enterprises obtained rather sales and spectacular growth because they know how to select different path and focus on development of distribution system, set up customer orientation an apply technology to production and management in order to form an exit at the end of tunnel.

“Cement market is very gloomy but grey color of the market is not a barrier but a unique chance”, shared Mr. Nguyen Vu Thanh, Deputy General Director of The Vissai Cement Group. It is proven by the Vissai’s revenue growth of 3.9 million tons in 2012 (a 115% increase on the year’s 2011).

As Mr. Thanh, the Vissai was founded in 2005 in the context of Vietnam’s cement market under restructure; thus, upon joining as a player of this playground, the Vissai is ready to overcome anticipated difficulties by its own creativeness.

For 8 years, the Vissai has established a nationwide distribution channel in 63 provinces and cities with hundreds of the primary distributors to directly sell and deliver goods to the customers (about 30,000 shops). Besides, the Vissai cement is exported to international markets.

Moreover, the leader of this cement enterprise shared that to serve for the customers and enhance product quality; the Group has attached importance to apply sciences and technologies to production and business. In 2012, in spite of difficulties, the Vissai obtained good growth, promoted prestige and confirmed trademark value of products like VISSAI PCB40, VISSAI PCB30, VISSAI PCB50, HOCEMENT PC40 and HOCEMENT PC40… in the market. As expected in 2013, the Vissai’s cement consumption output will obtain 4-5 million tons for the domestic and export purposes.