Inventories down due to production cuts, not improved sales: building materials industry

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Inventories have fallen in the construction materials industry, but insiders said it is due to production cuts sparked by the slump in the property sector rather than any increase in consumption.

Cement stocks are down by more than 28 percent since June to two million tons since many factories have cut output, Saigon Economics Times quoted the Vietnam Cement Association as saying Tuesday.

Nguyen Van Thien, the association chairman, said many factories with a capacity of 1,000 tons a day have even shut down temporarily.

Cement sales in the first eight months of 2012 were down 8 percent from a year ago to 31 million tons, he said, forecasting sales of around 47 million tons this year compared to 49 million tons last year. 

Figures from the Vietnam Steel Association showed that 316,000 tons were in stock as of August 31.

Production this year has fallen by 10.2 percent from last year to nearly around three million tons.

The output of other construction materials as iron, cast iron, concrete, and ceramic tiles in the first eight months fell by 5-13 percent, according to the General Statistics Office.

"As long as the property market is frozen, producers of all building materials, including steel companies, will meet the same fate," the steel association said.

"All the difficulties cannot be overcome immediately."

The real-estate market has been in a slump for the last three years and is likely to bottom out in 2012, VnEconomy quoted Deputy Minister of Construction Nguyen Tran Nam as saying. Few transactions have been carried out despite sharp price decreases.

There have been media reports that property companies in Ho Chi Minh City and Hanoi had inventories worth VND83.8 trillion (US$4 billion) in July, up 6.69 percent from the end of 2011.

Many have been offering discounts to liquidate them.  

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