This year, the number of construction sites has sharply decreased, raising concerns about a decline in shipments within the cement industry. As a result, cement companies have begun implementing measures, such as suspending operations at kilns.

Apartment construction site in downtown Seoul. /Courtesy of News1

According to the Ministry of Land, Infrastructure and Transport on the 24th, the cumulative approval for permits from January to November last year was 273,121 dwellings, a decrease of 17.6% compared to the same period the previous year (331,263 dwellings). The Korea Housing Industry Research Institute's '2025 Housing Market Outlook' forecasts approvals at 330,000 dwellings and starts at 300,000 dwellings, which significantly falls short of the averages from 2017 to 2021 of 540,000 approvals and 520,000 starts.

As construction sites decrease, the shipment of cement used on-site also declines. The Korea Cement Association reported that last year's cement shipments were 44.19 million tons, marking an approximate 11.8% decrease from the previous year (50.96 million tons). After consistently exceeding 50 million tons since 2021, shipments dropped below that mark for the first time in four years last year. In particular, domestic cement shipments were limited to 43.6 million tons, a decrease of approximately 13.2% compared to 50.23 million tons in 2023.

Compounding this issue, there are concerns that rising industrial electricity rates will continue to exacerbate challenges this year and beyond. While the government has taken mediation steps, such as forming a supply stabilization consultative body for construction materials, the situation has worsened due to efforts to increase cement imports and demands for price reductions from the construction industry.

A source from the cement industry noted, 'Due to the slump in the construction market, the reduction of construction orders itself, which has the most direct impact on the cement industry, means that difficulties may persist not only this year but also until next year.' They added, 'Currently, there are comments within the industry suggesting that the situation is even more challenging than during the 1997 financial crisis.'

Exchange rates are also negatively impacting the cement industry. Recently, while the price of thermal coal, a key raw material for cement, has declined, soaring exchange rates have caused additional strain. According to the Korea Resource Information Service, the price of Northeast Asia thermal coal (CFR Northeast Asia 5750 kcal/kg NAR) was $101.21 per ton as of the 13th, down 14% from $117.7 during the same period last year. However, as of the 24th, the won to dollar exchange rate had risen to around 1,430 won, nearly a 100 won increase compared to around 1,330 won in January of last year.

In response, cement corporations such as Sungshin Cement and Hanil Cement have begun implementing measures by halting kiln operations or delaying major repairs. Starting in the second half of last year, Sungshin Cement suspended operations at one of its five kilns in consideration of decreased cement demand, while one kiln is under long-term suspension. Hanil Cement has suspended operations at two of its six kilns, while two are under maintenance.

A source from a cement manufacturer stated, 'For the time being, we expect cement sales to remain subdued until the first half of the year. The only action we can take under the current circumstances is to reduce costs.' They added, 'Investment has been halted or postponed, and we are regulating production by suspending kiln operations or delaying major repairs.'

Another source from a cement manufacturer remarked, 'In the year before last, we operated the kilns almost non-stop, but this year, that's not possible.' They noted, 'Currently, combined with the construction market slump, political turmoil, and a reduction in SOC investments, it is challenging to propose clear measures.'