Can public investment and real estate bring cement consumption back to life?

In the report on the cement industry, VNDirect Securities Company identified infrastructure investment and the vibrant real estate market as the main growth drivers for domestic cement demand in the period 2022-2023.

Cement consumption in the period 2022 – 2023 will be higher than the pre-epidemic level, reaching 66.5 – 69.8 million tons, respectively, up 5 – 6% over the same period.

Specifically, VNDirect expects the supply of new apartments in both Hanoi and Ho Chi Minh City in 2022 will recover strongly, at 40% and 60% respectively compared to 2021.

The supply of new homes is forecasted to grow strongly thanks to the loosening of legal bottlenecks in project investment licensing and the well-controlled epidemic to keep construction activities uninterrupted.

Besides, resort real estate will also recover quickly in the near future thanks to the recovery of Vietnam’s tourism market.

In the field of public investment, VNDirect believes that the disbursement of capital in 2022 will increase by 20-30% compared to the actual level in 2021 thanks to additional capital for infrastructure development from the newly approved economic stimulus package. Previously, disbursement of public investment in 2021 was low, reaching only 85% of the whole year plan.

Many key transport infrastructure projects have completed preparation and site clearance and will begin construction of main items next year. In 2022, the Government will focus on accelerating the progress of major infrastructure projects such as Long Thanh Airport, North-South Expressway, etc.

In addition, the bottlenecks of lack of construction stone and backfill have been resolved when the Government grants mining permits for new mines; prices of construction materials such as iron and steel, cement, and construction stone are forecasted to decrease next year.

VNDirect said that since the Covid-19 epidemic broke out in Vietnam in 2020, major social distancing periods have significantly affected the progress of construction works, leading to domestic cement demand. land decline.

According to data of the Vietnam Cement Association (VNCA), domestic cement consumption in 2020 reached 62.1 million tons, down 4% over the same period and this is the first time recorded a decrease compared to the same period last year. same period since 2013.

Similarly in 2021, when the Covid-19 epidemic broke out, cement consumption reached only 62.7 million tons, a slight increase of 1% compared to 2020.

Especially when the Government issued a directive on social distancing in July 2021, cement consumption in the South region in the period of July-September 2021 reached only 2.5 million tons, down 53%. compared with the same period.