Slow construction, smuggling spur glass surplus

The Vietnam Construction Glass Association (VCGA) is reporting a surplus of 21mil sq.m this year, 8mil more than last year.

Industry officials blame slow real estate and smuggling from China.

Ngo Van Thanh, Secretary General of VCGA, said that glass inventory was high nationwide and a stagnant real estate market has driven down demand.

Local glass must also compete with Chinese glass which, though taxed at 30%, is still cheaper as smugglers continue to elude authorities. Chinese glass has been flooding Vietnam’s market and dealers have cut their prices by offering large accounts in order to move surplus. But most efforts have failed and many distributors are selling below cost. The price of construction glass has reduced sharply this year. ‘White’ glass 4mm thick, once priced at VND47.500 per square metre in 2005, now sells for VND34,000.

Local producers have now agreed to halt producing white 4mm glass, the highest surplus, which accounts for 30% of total output, and focus on 5mm glass only.

Vietnam has seven construction glass plants nationwide, with total capacity of 81mil sq.m. Yet total domestic demand is less than 80mil sq.m at the moment. Industry analysts believe that the supply will continue exceeding demand as several new plants open this year. Truong Son Glass Plant, owned by Ky Anh Company Ltd, for example, will roll out its first products in 2006 at 12mil sq.m per year.

Several plants with outdated technology will also stop production, including Dap Cau Plant (4.5mil tonnes/year) and Mong Cai Plant (2.5mil tonnes), but it is not enough. In 2007, VGI, a joint venture between Japanese Nippon Sheet Glass and Vietnamese Construction Materials Corporation No 1, will open a 500tonne/day float glass plant in in Vung Tau in the south of Vietnam. The plant will produce 29mil sq.m of glass per year, raising industry capacity to 116mil sq.m.

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600450 Slow construction, smuggling spur glass surplus glassonweb.com

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