Cement Stock Shortage, an Urgent Crisis for the Ready-Mixed Concrete Industry

Ready-mix concrete pouring site.
[Photo by Asia Economy DB]

[Asia Economy Reporter Kim Jong-hwa] As cement stocks run low, the ready-mixed concrete (Remicon) industry is facing an urgent crisis.

Recently, with warmer weather and the start of the construction peak season, cement demand has increased, but due to a shortage of cement inventory, supplies are not being delivered to construction sites on time. Construction projects delayed by COVID-19 have been actively progressing this year, causing the industry to suffer from a shortage of cement supply.

According to the industry on the 30th, as of the 24th, the nationwide cement inventory volume compiled by the Korea Cement Association is about 514,000 tons. During the peak season, cement inventory is usually maintained at about 60% of storage capacity. Since domestic cement storage capacity is about 2.1 million tons, the appropriate inventory level is approximately 1.26 million tons.

Currently, the cement industry's inventory volume is only about 40% of the peak season inventory. The daily shipment volume of cement during the peak season is about 200,000 tons, which is approximately 50,000 tons more than the daily production volume of 150,000 tons. With the current inventory, it is estimated that stocks will run out in 2 to 3 days. Some small and medium-sized Remicon companies, finding it difficult to secure supplies, have blamed the cement companies.

A Remicon company official said, "Since the price increase notification at the end of last year, negotiations have not proceeded smoothly, and it seems that cement companies are adjusting supply volumes," adding, "It appears that they prioritize supplying quantities to companies that agree to the price increase. They are trying to dominate the market by asserting supplier superiority and disciplining the demand side."

In response, a cement industry official stated, "Every year, production facilities are maintained during the off-season, but this year, the maintenance period was extended due to the expansion of eco-friendly facilities, and logistics conditions have worsened compared to before," and rebutted, "The claims of the Remicon companies are groundless."

The industry analyzes that the shortage of cement inventory is due to a combination of the unique characteristics of the cement industry, warmer-than-usual weather, and the era's demand for eco-friendliness.

Cement is difficult to store, so off-season production is about 50-60% of peak season levels, resulting in a lower operating rate compared to other manufacturing industries, and the current inventory just before the peak season is naturally low. However, this year, since February, the weather has been warmer than expected, leading many construction sites to start operations earlier, and with ESG (Environmental, Social, and Governance) management becoming essential, cement companies have extended maintenance periods longer than usual to install and expand eco-friendly facilities.

Deterioration in logistics conditions is also one of the reasons for the reduced inventory. The Seoul Gwangwoon University Station, a major logistics hub for cement, was closed at the end of last year, making large-scale logistics movement and loading via rail impossible. Cement-exclusive transport truck operators, known as BCT truck operators, are switching to container trucks with better conditions or to the growing parcel delivery market. As a result, there is a shortage of transport personnel, making it difficult to receive supplies on time even when stock is available.

A cement industry official said, "It makes no sense to adjust supply when demand has decreased; if demand increases, it should be welcomed," adding, "Recently, Remicon companies suffering from internal conflicts and rising transportation costs said this out of frustration, hoping for some relief, but it was not meant seriously."

This content was produced with the assistance of AI translation services.