Due to lack of output, some cement production enterprises in Nghe An operate at a low level.

Tan Thang Cement Factory in Quynh Luu District is currently suspending clinker production. Photo: Van Truong

Difficult to sell products

Nghe An cement industry is facing many difficulties and challenges, many factories have to temporarily stop kilns or reduce production. For example, Tan Thang Cement Factory in Quynh Luu district has an operating capacity of 2 million tons of products/year, operating since the beginning of 2020. This is a factory with an investment of over 5,000 billion VND, when put into operation, it created jobs for nearly 400 workers. However, from the beginning of 2023 until now, the factory has had to operate at a low level.

A representative of Tan Thang Cement Factory said: Since the beginning of 2023, the consumption situation has been very difficult, so the factory had to temporarily stop for more than 3 months. Up to this point, the factory has only consumed over 200,000 tons of clinker, and over 300,000 tons of cement, down nearly 30% compared to the same period in 2022. Currently, there are hundreds of tons of clinker products in stock, and the factory has completely stopped the kiln. For cement products, production is only carried out when there is an order, because if the production cannot be consumed, the goods will be damaged if left in the warehouse for a long time.

The reason for the deadlock in output is the decline in the clinker export market to the US, and the domestic cement market is also difficult to consume. Although the work is unstable, the factory still has to retain nearly 400 workers and pay them 70% of their salary.

bna_van truong 2.jpeg — Some dealers still have cement in stock. Photo: Van Truong

Also in the above situation, Hoang Mai Cement Factory has also seen a decrease in consumption output in recent times. Specifically, from the beginning of 2023 to now, the factory has only consumed over 1 million tons of products, including over 800,000 tons of cement and over 125,000 tons of clinker, with product consumption decreasing by nearly 15% compared to the same period in 2022. Cement prices have dropped, from 50 USD/ton to 47 USD/ton.

The reason for the difficult consumption is that the export market of Hoang Mai Cement Factory, the Philippines, still maintains low prices due to price competition among exporters. Domestic consumption demand has decreased, clinker customers have stopped receiving goods since March 20 and are not expected to receive goods yet. Not to mention, many cement factories in the provinces are offering products at lower prices than Hoang Mai Cement Factory, which has significantly affected the consumption stage.

Solution

A representative of Tan Thang Cement Factory said: To overcome difficulties and overcome unfavorable market factors, the Factory's management board continues to research, apply technology and promote investment to reduce product costs, increase competitiveness, innovate, improve service quality; focus on developing the domestic market, in which, focusing on increasing market share in the Central region and developing the Southern market...

At the moment, Hoang Mai Cement Factory is implementing a number of solutions such as: Reducing cement production capacity, approaching public investment projects in the province to supply cement, searching for some domestic markets and foreign countries for export. Along with that, regularly synthesizing, analyzing and evaluating the market, improving forecasting capacity, building flexible sales policies according to market developments.

Mr. Nguyen Van Hiep - Head of Industrial Management Department (Department of Industry and Trade) said: Currently, the whole province has 4 cement factories, with designed cement output reaching 7.8 million tons/year, including: Song Lam Cement Factory (Do Luong) with a capacity of 4 million tons/year, Hoang Mai Cement Factory 1.4 million tons/year, Song Lam 2 Cement Factory (Anh Son) with a capacity of 0.6 million tons/year, Tan Thang Cement Factory with a capacity of 1.8 million tons/year.

Since the beginning of the year, cement enterprises in Nghe An have been under great pressure as cement consumption has decreased, selling prices have decreased, but the prices of materials, raw materials and fuels for cement production have increased, or are at high levels, affecting production and business efficiency.

In the first 8 months of 2023, the whole province produced over 6.2 million tons of cement, a decrease of over 300,000 tons over the same period, and over 5.3 million tons of clinker, a decrease of over 310,000 tons over the same period.

bna_van truong 23.jpeg — There are fewer state and civil construction projects than in previous years, so cement consumption is difficult. Photo: Van Truong

Faced with the continuing difficulties, the Department of Industry and Trade recommends that cement enterprises closely monitor the market situation and find proactive and flexible solutions such as seeking export markets. Nghe An needs to accelerate the development of public investment, as well as develop new rural areas to help factories consume cement products.

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