The Korea Cement Association noted that the cement domestic sales (shipments) from January to February this year have significantly decreased compared to last year, making it unlikely to achieve the domestic sales target of 40 million tons (t) for this year.
The Cement Association announced on the 24th that domestic cement sales for January and February this year recorded 4.45 million tons, a 24.8% plunge compared to the same period last year. This is the lowest volume recorded for domestic sales in January and February over the past five years. Compared to 7.12 million tons recorded in 2023, this marks a 37.5% (2.67 million tons) decrease in two years.
The cement industry analyzed that in order to achieve this year's domestic sales target of 40 million tons, at least 5 million tons of shipments were needed in January and February, but the actual results fell short by more than 500,000 tons.
The Cement Association explained in a press release that despite the economic recession caused by the novel coronavirus disease (COVID-19) and the disruption of international supply chains leading to soaring raw material prices from 2020 to 2022, domestic cement sales in January and February consistently maintained around 6 million tons, adding that in 2023, due to the tentative resumption of construction site operations, even during the winter, 7.12 million tons were recorded.
However, the Cement Association claimed that achieving 40 million tons in domestic cement sales this year is already an impossible goal. The Cement Association emphasized, "The domestic sales of 40 million tons is a performance that has not been experienced even during the IMF financial crisis since first entering the 40 million ton range in 1991 with 44.2 million tons."
It added, "At the time of achieving rapid growth in 1991, we recorded a performance of 44.2 million tons, exceeding our production capacity (43.61 million tons)," but noted that currently, domestic sales are only 40 million tons (utilization rate of 64.5%, the minimum operating rate required to maintain corporations is over 70%).
Despite some production lines being halted due to the decrease in shipments, the cement industry reported that as of the end of February, stocks (clinker + cement) stood at approximately 3.4 million tons, nearing about 90% of storage capacity (3.79 million tons, combined clinker + cement).
Hanil Cement's Dan-yang plant has suspended operations for 2 out of its 6 production lines since the latter half of last year to adjust production levels. Other cement companies are also facing temporary outdoor storage due to exceeding storage facility capacities and are experiencing the risk of further operational halts as there is no longer space to stack more cement. Currently, despite the onset of peak season, 8 out of 35 production lines are halted. An additional 2 lines are planned to be stopped in April, bringing the total to 10.
A spokesperson for the Cement Association said, "With the won/dollar exchange rate crystallizing in the mid-1400 won range in the first quarter of this year, the situation is at the highest level since the foreign exchange crisis, while all factors for cost reduction, such as the decline in international coal prices, have been neutralized," adding that "the management crisis facing the cement industry triggered by the severe demand cliff will continue for the time being."