Cement Association, "Maximizing Production Facilities Operation to Minimize Supply Disruptions"

[Asia Economy Reporter Kim Jong-hwa] The Korea Cement Association announced on the 2nd, "We will make every effort to stabilize supply and demand by maximizing the operation of production facilities, converting export volumes to domestic use, and adding additional railway freight cars to minimize supply disruptions."

The association stated this in its "Cement Industry's Position on Resolving Cement Supply Disruptions," explaining, "The recent cement supply disruptions were caused by temporary production decreases due to regular maintenance of manufacturing facilities and inventory shortages."

Cement companies conduct regular major maintenance annually during the off-season from January to mid-March to replace essential parts of manufacturing facilities such as kilns, which operate year-round, and once maintenance is completed, they have supplied cement promptly during the peak season (April to November).

However, the association added, "This year, unlike previous years, the reduction in operating hours of manufacturing facilities was inevitable due to shortened working hours under the 52-hour workweek system, changes in working conditions at construction sites due to the Serious Accident Punishment Act, and the expansion of new eco-friendly production facilities promoted by each company as part of ESG management."

Accordingly, cement demand, which had sharply declined for three consecutive years since 2017, began to recover from the fourth quarter of last year, causing the average inventory of 1.26 million tons to fall to 820,000 tons by the end of last year, down to 65% of the previous level.

According to the association, the shortage of railway freight cars and bulk cement trailer (BCT) vehicles, the main transportation means for cement, also caused disruptions in smooth cement supply. The main transportation methods for cement include rail transport, land (road) transport using bulk cement trailer vehicles (BCT), and maritime transport via ships from ports in Gangwon Province.

In the case of rail transport, Korail closed cement transport railway lines, which are low-utilization and unprofitable routes, due to station area development and double-tracking projects, resulting in a shortage of transport volume (1 million tons annually across five lines). This situation has worsened since the closure of the Gwangwoon University Station shipping base, responsible for supplying the metropolitan area, at the end of last year.

Additionally, while there is a need to expand railway operations during the peak season, the association states that flexible operation is limited due to the 52-hour workweek and five-day workweek systems.

The decrease in operation of BCT vehicles transporting cement to construction sites also affected supply and demand. This is because vehicle owners have switched industries to container transport, which offers better freight rates and working conditions, or to the rapidly increasing parcel delivery sector, resulting in a 10-15% reduction in BCT vehicles.

The association said, "The cement industry will make every effort to stabilize supply and demand by maximizing the operation of production facilities, converting export volumes to domestic use, and adding additional railway freight cars to minimize supply disruptions." It added, "As of the 2nd, the industry is accelerating production and urgently converting export volumes to domestic use, securing additional cement and holding about 500,000 tons of inventory."

Furthermore, the association emphasized, "Although it is somewhat difficult to meet the rapidly increasing demand centered in the metropolitan area, we will make every effort to prevent supply disruptions feared by some in advance and stabilize supply and demand to enable smooth operation at construction sites."

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