Cement Prices to Increase by 5.1% Starting July

Cement-Ready-Mix Concrete Industry Agrees on 78,800 KRW with Over 3,800 KRW per Ton Increase

Cement prices will increase by 5.1% for the first time in 7 years.
[Photo by Yonhap News]

[Asia Economy Reporter Kim Jong-hwa] Cement prices will increase by 5.1% starting in July. This is the first increase in seven years since June 1, 2014.

According to the Korea Ready-Mixed Concrete Industry Cooperative Federation (Ready-Mixed Concrete Federation) and the cement industry on the 17th, the Ready-Mixed Concrete Federation reached a consensus on the price increase after several meetings with cement industry officials from April to recently.

Bae Jo-ung, chairman of the Ready-Mixed Concrete Federation, stated, "Due to concerns about collusion, we could not all meet at once, so we had to contact company representatives or sales directors individually," adding, "Yesterday (the 16th), 18 federation directors, including regional cooperative heads, gathered to discuss the agreed matters with the cement industry and decided on the cement price increase."

The Ready-Mixed Concrete Federation held a board meeting on the 16th and agreed to purchase cement at 78,800 KRW per ton, raising the price by 3,800 KRW per ton to reflect the increased manufacturing costs due to the rise in bituminous coal prices, alleviate supply instability, and promote coexistence among industries.

A representative from the Korea Cement Association said, "The import price of bituminous coal, which accounts for 30% of cement manufacturing costs, rose by 43.2% compared to the average price last year, but prices remained unchanged, forcing us to endure deteriorating profitability," adding, "Honestly, it was insufficient, but it is fortunate that prices are finally increasing."

The price of bituminous coal used in cement manufacturing surpassed 125 USD per ton at the end of last month, marking a 56% increase compared to the end of last year. Additionally, nitrogen oxide emission charges imposed on the cement industry increased from 6 billion KRW last year to 15 billion KRW this year.

Along with this, the introduction of the greenhouse gas emissions trading system resulted in a burden of approximately 70 billion KRW, prompting the cement industry to simultaneously begin facility improvement work, which reduced cement production and caused a supply crisis. By the end of May, cement supply was 990,000 tons, a 26% decrease compared to the same period last year.

With the increase in cement prices, ready-mixed concrete prices are also expected to rise. Chairman Bae said, "Transportation costs nationwide have risen by nearly 15%, making things very difficult for us as well," and added, "We plan to send official letters to construction companies soon requesting price increases."