OR/18/068 Hanoi materials supply and demand analysis
|Bide, T P, Brown, T J, Petavratzi, E, and Mankelow, J M. 2018. Vietnam – Hanoi city material flows. Nottingham, UK, British geological Survey. (OR/18/068).|
Due to the lack of data, a full material flow analysis would not be possible and therefore a different approach was taken, i.e. using the available figures as proxies to examine supply and demand.
An example of using proxy data is as follows: use production and trade data to calculate national apparent consumption, then divide this by the population to obtain a figure for consumption per capita. The result can be converted to Hanoi specific figures by multiplying the consumption per capita by the population of Hanoi. Then using these figures, the material demands of Hanoi can be calculated and predictions can be made about potential future demand scenarios.
Production, trade and apparent consumption
Apparent consumption is estimated based on the formula:
- Apparent consumption = production + imports – exports +/- stock change
As stock changes tend to be temporary when considering construction minerals, no account of stocks is taken into consideration in this study. It is imperative when using this method that all the various trade statistics codes used to describe a particular commodity are taken into account.
Five separate commodities have been included in this analysis that are considered to be the most important in terms of construction of housing and infrastructure in a modern city. These are:
- Sand and gravel
- Crushed rock
Official consumption statistics are occasionally quoted in news articles regarding the construction sector but official documents are not publically available. However the few available statistics seem to broadly agree with the calculations made by this study. For example an article from the Vietnamese cement association (Vietnam Cement Association, 2017) states the first quarter cement consumption to be 12.9 million tonnes for 2017 (approximately 50 million tonnes per year) this study estimated cement consumption at 62 million tonnes for 2016 and 54 million tonnes for 2015.
As discussed earlier there is no publically available mineral production data at city level for Hanoi. It is possible that a regional or central government department, (i.e. the Ministry of Construction, Ministry of Building Materials or Hanoi City Peoples Committee) may collect this information and occasional quotes in related news articles certainly suggests a greater granularity of data than just national level exists however it has not been obtainable for this study.
All mineral production data has been sourced from the General Statistics Office of Vietnam (GSOV), which has a comprehensive on-line database for national mineral production. However, data prior to 2007 is not comprehensive so this has been used as the earliest year of reference for this study. Data for aggregates is given in thousand cubic metres, therefore some assumptions have been made to convert these figures into kg and the following densities were applied: crushed rock 2500 kg/m3 and sand and pebbles 1640 kg/m3. The densities applied were based on those BGS has used for previous work and were derived via consultation with the UK aggregates industry.
The production figures from the GSOV were validated to some extent by the few pieces of information available in the published literature. For example, Bernardi et al. (2014) state that in 2011 the sand mining rate in the Red River Delta was 6.6 million m3 upstream of Hanoi and 2.3 million m3 downstream so approximately 9 million m3 of sand production from the Red River Delta (which is assumed to be the main producing area feeding into Hanoi). Using population figures to calculate per capita production the GSO reported figures indicate that Hanoi produces around 4.3 million m3 per year. One major issue with production data for aggregates for Vietnam is the unknown quantity of illegally mined material. This could form a significant part of total annual production. However, it is not known how much is illegally mined or if attempts are made to accommodate this in the official statistics. One possible indicator for the levels of illegal production is from a quote from the Ministry of Construction Department of Construction Materials with states that the legal sites for sand extraction can only meet 60–65 per cent of demand for major Vietnamese cities, this implies the remainder is from illegal sources (Viet Nam News, 2017b; Vietnam News Agency, 2017).
For cement, the country has 82 production lines of rotary kiln with a total annual capacity of 97.64 million tonnes (Cement News, 2018), this compares with an annual reported production of 77.3 million tonnes. It is also reported by industry sources that Vietnam consumed 49 million tonnes of cement in 2012 (Global Cement, 2012). This compares with the apparent consumption of 54 million tonnes as calculated as part of this research.
Regarding production data for steel, there are several data series available. Official data from the GSOV is presented separately for steel bars and steel. The USGS presents the GSOV data but labels steel bars as ‘crude steel’ and steel as ‘rolled steel’ (Fong-Sam, 2014). The official BGS data series comes from the World Steel Association and is different (Brown et al., 2017). This could be because the BGS figures represent true crude steel production whereas the GSOV figures (as also presented by USGS) represent both finished products as well as crude steel. However, this is not clear and needs to be confirmed. For this MFA study, only the data for steel from GSOV was utilised to ensure consistency with the methodology used for the other commodities.
The effects that government legislation and market forces has had on production are clearly visible in past trends (Table 5). The ban by Indonesia on sand exports in 2007, followed by Cambodia in early 2009 caused an increase in production from Vietnam (much of which was subsequently exported) as producers moved to fill the hole in the market. This rise in production (and also exports) ceased in 2010 due to the ban by Vietnam in mid-2009 on the export of non-marine sand. It remains to be seen if the outright ban of all sand exports from Vietnam made in September 2017 will further reduce production figures. These effects likely mask an increase in demand from Hanoi in recent years.
It can be noted that across all commodities, with the exception of steel, in the period from 2011 to 2013 production decreased (Table 5). This was due to a slowing of the growth rate of the Vietnamese economy during this period as a result of high interest rates, high ratios of bad debt, a slowdown in the real estate market and difficulties in gaining capital (Van Vu, 2016). However a subsequent improvement in the Vietnamese economy has also seen production in all commodities increase significantly.
|Sand and gravel production||110||105||115||103||95||78||82||85||87||90|
|Crushed rock production||232||305||342||367||389||342||335||368||395||413|
Similar to the mineral production data, the only publically available trade data is at the national level. Although regional, or city level, data may exist, BGS did not have access to them for this study. Therefore for the five commodities being assessed, all trade data were obtained at national level from the UN Comtrade website, a website run by the United Nations which collates international trade data (Table 6). Unfortunately Vietnam only reports its trade in monetary terms whereas this study required a unit of mass. Therefore instead of using data reported by Vietnam the imports and exports reported by other countries to and from Vietnam were used instead as these were given in kg.
Data from UN Comtrade is categorised according to trade codes. The following trade codes were used.
- aggregates 2517 and 2505;
- cement 252310, 252321, 252329, 252330 and 252390;
- bricks 6904, 681011 and 681019 (refractory products were not considered here); and
- steel 720712, 720719, 720720, 721810, 721891, 721899, and 722490.
The effects of various legislation prohibiting sand exports described in the production section can also be clearly seen in the trade statistics for sand (Table 6).
Apparent consumption data
Apparent consumption was calculated using the formula stated above. First apparent consumption for Vietnam was calculated using national figures. This was then converted to consumption per capita by dividing the total apparent consumption by the population. Using this, the apparent consumption for Hanoi can be calculated by multiplying the population of Hanoi by the apparent consumption per capita Figure 14. This methodology is reliant on all material produced being consumed, however if there is significant market oversupply it is possible for production to become decoupled from consumption. For instance if new production capacity is brought online that is difficult to quickly shut off. Cement is an example of this, where production capacity in Vietnam is predicted to outstrip demand by as much as 26 million tonnes by 2020 due to construction of new plants (Global Cement, 2018).
|Cement||Imports||3 966||3 712||3 730||2 405||1 009||488||129||175||143||778|
|Exports||10||37||29||1 592||5 353||10 958||15 377||8 987||13 958||15 952|
|Steel||Imports||901||868||1 427||1 369||514||356||305||291||512||657|
|Exports||2 647||7 150||28 170||5 332||1 356||1 205||6 775||11 777||13 138||8 479|
|Crushed rock||Imports||943||4 770||5 661||8||8||16||4||6||4||19|
Projections of future demand
The Ministry of Construction have published some projection figures for future demand for sand. One report states national demand for sand will increase from around 92 million m3 (this is around 150 million kg) in 2015 to 130 million m3 (or 213 million kg) by 2020 (Viet Nam News, 2017a). These figures do not seem to match the published production figures of around 90 million kg for 2016 and this could possibly indicate the scale of illegal extraction. A separate report from the Ministry of Construction states that between 2016 and 2020 domestic demand for construction sand is estimated to be 2.1–2.3 billion m3 between 2016 and 2020 (Cafef, 2017). This is an order of magnitude higher than the reported production figures and seems at odds with reported reserves of 2 billion m3, highlighting some of the uncertainty that surrounds these data.
There are figures available for projections of population growth in Hanoi which have been sourced from the Hanoi master plan to 2020. These state that the population is forecast to grow to 7.44 million by 2020, 9.2 million by 2030 and 10.8 million by 2050 (NhanDan, 2011). These figures allow the annual population growth for Hanoi to be predicted. The apparent consumption of materials for Hanoi can be predicted using this population trend and the trend of per capita consumption for the last 10 years. Different scenarios can also be estimated using the highest and lowest growth rates for per capita consumption seen over the last 10 years. This analysis has been undertaken for all commodities in this study as shown by Figure 15 to Figure 19. The following equations explain in more detail how future demand was projected.
- Step 1: Calculation of the compound annual growth rate of consumption per capita between 2007 and 2016
- Step 2: Forecast consumption per capita to 2030
- Step 3: Forecast consumption for Hanoi to 2030
The vertical lines appearing in the graph from year 2017 to 2030 have been constructed using an average standard deviation figure measured from the Hanoi consumption figures in the past 10 years and are added to illustrate the potential discrepancies in the main trend line that may be observed in the future.
The results suggest growing demand for all materials as summarised in Table 7:
|Key construction materials in Hanoi||Forecasted demand in 2030 compared to 2016 data|
|Sand & gravel||Increase 2-fold|
|Crushed rock||Increase 2.5-fold|
- VIETNAM CEMENT ASSOCIATION. 2017. Cement market Quarter 1 Vietnam Cement Association. [cited 2/3/2018]. http://ximang.vn/bien-dong-thi-truong/thi-truong-xi-mang/quy-i-san-xuat-va- tieu-thu-xi-mang-tang-nhe-9507.htm
- BERNARDI, D, BIZZI, S, SCHIPPA, L, SCHMITT, R, and SONCINI-SESSA, R. 2014. Accounting for river morphology in the management of red river (Vietnam): a numerical modeling approach. 3rd European Congress of the International Association of Hydraulic Engineering, 1–11.
- VIET NAM NEWS. 2017b. Sand prices see sharp increase. Viet Nam News Biz Hub. [cited 1/2/2018]. http://bizhub.vn/news/sand-prices-see-sharp-increase_285412.html
- VIETNAM NEWS AGENCY. 2017. Vietnam faces severe sand shortage. Vietnam News Agency. [cited 2/3/2018]. http://english.vov.vn/economy/vietnam-faces-severe-sand-shortage-349192.vov
- CEMENT NEWS. 2018. Vietnam produces 7.2Mt of cement in January. Cement News. [cited 31/1/2018]. Cement News. https://www.cemnet.com/News/story/163346/vietnam-produces-7-2mt-of-cement-in-january.html
- GLOBAL CEMENT. 2012. Cement in Vietnam. [cited 3/2/2018]. http://www.globalcement.com/magazine/articles/687-cement-in-vietnam%5d
- FONG-SAM, Y. 2014. The Mineral Indsutry of Vietnam. USGS https://minerals.usgs.gov/minerals/pubs/country/2014/myb3-2014-vn.pdf
- BROWN, T, IDOINE, N, RAYCRAFT, E, SHAW, R, DEADY, E, HOBBS, S, and BIDE, T. 2017. World Mineral Production 2011–15. (British Geological Survey.) ISBN 0852728670
- VAN VU, N. 2016. ECONOMIC GROWTH OF VIETNAM IN 2011–2013. Vietnam Social Sciences, 10. http://www.vjol.info/index.php/VSS/article/viewFile/23657/20220
- GLOBAL CEMENT. 2018. Production continues to soar in February 2018 in Vietnam. Global Cement [cited 2/3/2018]. http://www.globalcement.com/news/item/7228-production-continues-to-soar-in-february-2018-in-vietnam
- VIET NAM NEWS. 2017a. Sand prices see sharp increase. Biz Hub [cited 2/3/2018]. http://bizhub.vn/news/sand-prices-see-sharp-increase_285412.html
- CAFEF. 2017. Record high sand prices and scarcity: Need early material substitutions?: Cafef. [cited 2/3/2018]. http://cafef.vn/gia-cat-tang-cao-ky-luc-va-khan-hiem-can-som-co-vat-lieu-thay- the-20170923182941722.chn
- NHANDAN. 2011. Hanoi's population to reach 8 million by 2020. [cited 3/3/2018]. http://en.nhandan.com.vn/society/item/1706702-.html