I never thought a day would come when we couldn't do interior work because there's no bond (adhesive).
On the 27th in Gangnam District, Seoul, at an interior shop. As the customer who had finished a consultation turned to leave, the owner closed the estimate. "We need 45 units of adhesive, but they say they can give us only 5." Prices also rose by nearly 50%. The owner ultimately gave up on the contract. On sites, work that had already started is coming to a halt. The "naphtha shock" sparked by the fallout from the Middle East crisis has hit the interior industry.
◇"From prices to supply"… construction grinds to a halt one after another
According to the interior industry on the 30th, the biggest thing stopping work on site is adhesive (bond). It is an essential material used in virtually every process, including tile, wood, and flooring. A business owner surnamed A in Gangnam said, "There is no process that doesn't use bond," and noted, "It's not just about higher prices; it's a complete 'gap' where we can't get it at all." The stock actually secured was about one-tenth of the usual.
The cause is naphtha (naphtha). As a basic raw material for synthetic resin production, its supply has snarled since the Middle East crisis. The government also restricted naphtha exports for five months starting on the 27th. A representative at bond manufacturer company B said, "Of the 500 products we sell, 10% to 20% are already marked sold out," adding, "The number of suspended items is likely to increase."
A representative at bond manufacturer company C also said, "We are experiencing production disruptions," and added, "We've often seen raw material prices rise, but this is the first time supply itself has been cut off."
The ripple effects are spreading quickly. Naphtha-based products such as polyvinyl chloride (PVC) and paint have also raised prices one after another. Noroo Paint and Samhwa Paint Industrial increased product prices by 20% to 55% starting on the 23rd, and KCC also raised supply prices by up to 40%.
A domestic tile company also recently notified clients of a unit price increase. In an official notice, the company explained, "Due to steep recent rises in raw material prices and a sharp jump in exchange rates, which are cost-increasing factors, we have adjusted supply prices," and, "We have reached the limit where it is difficult to provide stable quality and service while maintaining existing unit prices."
On site, people are saying, "Now estimates themselves are meaningless." Interior construction contracts are usually signed two to three months before groundbreaking, but it is hard to predict how much material prices will rise in the meantime.
A business owner surnamed Kang (45) in Gyeonggi Province said, "If we explain that construction costs may go up, customers abandon the contract," adding, "I'm even considering closing up until fall."
Some firms are not taking new contracts. If they cannot reflect higher material costs, they have no choice but to shoulder losses. An industry official said, "Material unit prices are adjusted each quarter, but the swings are so large now that contracts themselves have become a risk."
◇Consumers also take a direct hit… fears of a prolonged squeeze
Consumers are also taking a direct hit. A bride-to-be surnamed Kwon (32), set to move in next month, said, "They say they'll apply the price increases even if we sign now, so I'm putting off the decision." A person surnamed Kim (36), who is considering purchasing an older apartment, also said, "The real estate expense is already a burden, and if interior expenses rise too, I'll have to redraw my plans."
At sites where contracts have already been signed, conflicts are emerging over additional expenses. The industry says, "Once material prices go up, they don't come down easily," and "Disputes over surcharges are likely to increase."
Many expect the situation will be hard to resolve quickly. As clashes continue among the United States, Israel, and Iran, uncertainty in the raw materials market is growing. According to Opinet, the oil price information system of the Korea National Oil Corporation (KNOC), the international naphtha price was $133.74 per barrel as of the 27th, nearly double from a month earlier ($68.87).
A petrochemical industry official said, "We have entered emergency management now, but we are barely maintaining plant operating rates," adding, "Accordingly, product output is also falling, so the supply gap could widen further."