Cement makers at odds with gov't over price hikes

A construction site in Seoul / Yonhap

By Lee Kyung-min

Cement makers and the government are locking horns over recent price hikes in construction materials, market watchers said, Sunday.

Cement makers say price hikes are inevitable since the government's carbon neutrality initiatives mandate a significant investment in expensive green materials in the makeup of cement. The government's committee on carbon neutrality said greenhouse gas emissions produced by the cement industry need to be lowered by 34 million tons by 2030.

In response, the government says that carbon-neutral technologies are the basis of national economic development in the construction industry, and are eligible for tax credits among other government policy assistance mechanisms. This is why the government is asking “to share the pain."

The Ministry of Trade, Industry and Energy said it held a meeting with the cement industry on June 23.

Among the attendees were SsangYong C&E and Sungshin Cement, both of whom said they will raise cement prices next month, a further increase from the 40 percent jump already experienced over the past two years.

They say production costs are soaring due to higher electricity fees, which make up around a quarter of manufacturing costs.

Nonetheless, the ready-mix concrete and construction industry is up in arms since the 40 percent increase applied in the past two years is already eating into their profit margins.

The ministry said the principle of market stability should be prioritized for the time being.

“Business conditions have worsened over the past few years, but please mobilize efforts to smoothen price negotiations for the months to come,” a ministry official said at the meeting. “A number of factors such as changes in bituminous coal and electricity bills should be considered. The government urges industry players to come to the negotiating table to reach an agreement.”

However, the guidelines for price stability are squarely rejected by the industry.

“We cannot come to an agreement not because we don't want to but because we simply can't make ends meet,” an industry official said.