Cement shortage hits construction industry

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VietStock FI English - 75 month(s) ago 51 readings

The Cement Producers' Group reported on Thursday that cement consumption has exceeded expectations so far this fiscal year. Mr Inpone Phathananoulack

“We anticipate that demand for cement will increase by about 20 percent each year, but this year it has risen by 25 to 30 percent,” Group Secretary Mr Inpone Phathananoulack said in an interview last week.

In the second week of this month, cement was readily available. “But by the third week the supply was slowing and is now not enough to meet market demand,” he said.

The capacity supply of cement to the Vientiane market is about 1,100 to 1,200 tonnes per day. Cement for sale to construction companies in the capital is produced at two factories in Vangvieng district, Vientiane province, another in Khammuan province and one in Xaythany district, Vientiane.

“Now the Vientiane market requires 1,500 to 1,700 tonnes of cement each day,” Mr Inpone said. “And this is only the amount needed for general construction, because companies involved in mega projects import the cement they use.”

This year the demand for cement has exceeded expectations because construction continued throughout the rainy season, whereas in previous years construction slowed at this time.

Normally there is no shortage of cement in November and December, but supply typically tails off in February. But this year, shortages are becoming apparent this month.

“We do not have enough to supply the market because we can't increase output much above the factories' capacity. Currently, output at each plant is exceeding capacity by 10 percent,” Mr Inpone said.

Capacity at the Vang Vieng 2 plant is 210,000 tonnes annually, but it is now producing 240,000 tonnes. Capacity at the Vang Vieng 1 plant is 76,000 tonnes, but this year output will exceed 80,000 tonnes. The capacity of the Xaythany plant is 80,000 tonnes but this year it has produced almost 90,000 tonnes. Cement is selling for 710,000 to 780,000 kip per tonne, as set by the government earlier this year. “We can regulate the price at present but we may not be able to do so in the future because inadequate supply will mean that middlemen will take advantage of the situation to increase the price,” Mr Inpone said.

“We have asked the Ministry of Commerce and Industry about importing cement to ease the pressure and meet market needs.”

In addition to the plants that supply Vientiane, there are also cement factories in Luang Prabang, Savannakhet and Saravan provinces.

The Saravan plant is currently running tests in preparation for official supply next year, and will have a production capacity of 250,000 tonnes. Another plant is under construction in Xaythany district, Vientiane.

The plant in Luang Prabang is in the process of expanding capacity from 80,000 to 250,000 tonnes per year. “Soon production will be over 1.8 million tonnes once the expansion is complete,” Mr Inpone said.

A third factory is under construction in Vangvieng district, Vientiane province, and is set for completion in 2013.

“When this factory becomes operational, cement production capacity will reach 2.8 million tonnes,” he said. “By that time we estimate that demand will not exceed 3 million tonnes.”

In 2006, the estimated nationwide demand for cement was just 800,000 to 900,000 tonnes per year.

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