Yoon's Pledge Boost and Raw Material Supply Shortage... Cement Stocks on the Rise

Ssangyong C&E up 8% since early March
Koryo Cement rises nearly 40%
Interior stocks also on the rise

[Image source=Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] Following President-elect Yoon Seok-yeol's pledge to ease real estate regulations and revitalize reconstruction, cement stocks are showing an upward trend as raw material prices rise.

According to the Korea Exchange on the 5th, Ssangyong C&E closed at 8,330 KRW, up 2.21% from the previous day. It has risen 8.04% since early last month. Korea Cement recorded 5,030 KRW, up 4.9% from the previous trading day, marking a sharp increase of 39.72% compared to early last month. During the same period, Hanil Cement and Sampyo Cement also rose by 20.44% and 12.86%, respectively.

Cement stocks have been classified as beneficiaries of the Yoon Seok-yeol administration's launch. Earlier, President-elect Yoon announced pledges to supply 2.5 million housing units during his term and exempt safety inspections for apartment complexes over 30 years old after completion, which is expected to increase demand for building materials.

Recently, it is analyzed that the rise in the price of bituminous coal, one of the raw materials for cement, due to Russia's invasion of Ukraine, is driving the stock price increase. The expectation is that the rise in raw material prices will lead to an increase in product prices. According to the Korea Resource Information Service, the price of bituminous coal per ton was $140.7 (about 170,000 KRW) as of February 25 this year but has since shown a steep upward trend. As of the 1st of this month, it stood at $207.6 (about 250,000 KRW), and on the 11th of last month, it rose to $256 (about 310,000 KRW). Domestic cement manufacturers rely on Russia for about 75% of their total bituminous coal imports.

However, experts caution that cement stocks are currently overheated due to expectations of price increases and advise a cautious approach. Kim Seung-jun, a researcher at Hyundai Motor Securities, explained, "Talks about cement price increases have existed for some time," adding, "Price increases are expected to occur in the second half of this year, and this expectation is already reflected in the stock prices." He continued, "Considering the timing of the price increase application, there is a possibility that the performance of cement companies may be poor in the first and second quarters of this year," and added, "Although President-elect Yoon's policies have been somewhat reflected, concerns about performance have not been factored in, so buying at this point could be risky."

Meanwhile, interior stocks, another beneficiary related to construction under President-elect Yoon, are also showing an upward trend. Hanssem closed at 83,400 KRW, up 2.08% from the previous day, rising 14.25% since early last month. Hyundai Livart also increased by 20.58% during the same period. Lee Sang-heon, a researcher at Hi Investment & Securities, said, "If real estate regulations are eased and transactions occur, demand for home renovations may also increase," adding, "Interior stocks could benefit in the mid to long term."