The domestic real estate market has not seen improvement, and has led to large inventories in the construction materials.
Steel producers are coping with a huge amount of inventory
At a conference addressing the issue in Danang City on May 25, Dr. Tran Van Huynh, Chairman of the Vietnam Construction Association, said that, due to the global and domestic economic downturn, over the past two years the construction material sector has faced a number of difficulties in sales, resulting in an overstock in inventory. Many construction materials companies have had to slow down or halt operations, he added.
In 2012, the total domestic steel consumption was estimated at 5 million tonnes, while the capacity was 11 million tonnes. Steel producers are coping with a huge amount of inventory, but last year the country still imported roughly 5 million tonnes of steel, valued at USD5 billion.
At the same time, Vietnam exported only 2 million tonnes of steel, bringing in USD2 billion last year.
Domestic cement consumption was estimated at 45.5 million tonnes in 2012, down 3.8 million tonnes compared to 2011. Many cement plants have run into debt, become insolvent or had to sell their stakes to foreign investors.
According to Mr. Pham Cong Danh, to deal with the problem, it was important to connect producers, distributors, bidders and investors in order to actively support domestic producers and deal with the overload of inventory.
Dr. Tran Van Huynh said that in the period between now and 2016, the capacity of the construction material sector will be around 20-30% higher than demand, and underlined the need for more exports in the industry.
