"Construction Material Prices Rise 35.6% Over 3 Years... Need for Supply-Demand Forecasting System Development"

Geonjeongyeon & Geonsanyeon Hold 'Construction Material Supply' Seminar
"Supply Imbalance Must Be Resolved to Ease Construction Companies' Difficulties"

Amid uncertainties in the construction market and rising raw material prices, the need to stabilize the supply and demand of construction materials has emerged. To minimize supply-demand imbalances, it has been suggested that a construction material forecasting system utilizing big data and other technologies should be developed and advanced.

On the 5th, a discussion took place at the seminar on 'Supply Conditions of Construction Materials and Policy Improvement Measures' held at the Construction Hall in Nonhyeon-dong, Gangnam-gu, Seoul. / Photo by Noh Kyung-jo

On the 5th, Park Cheolhan, a research fellow at the Korea Research Institute for Construction Industry, stated at the seminar "Construction Material Supply Conditions and Policy Improvement Measures" held at the Construction Hall in Nonhyeon-dong, Gangnam-gu, Seoul, "Construction material prices have risen by 35.6% over the past three years, increasing difficulties for construction companies," adding, "Given the supply issues caused by both domestic and international factors, it is necessary to establish a statistical system to monitor trends in material supply volume."

Previously, in 2021, construction surged sharply to avoid the price ceiling regulation, but supply shortages occurred due to disruptions in the import of Chinese rebar. The following spring, the Russia-Ukraine war caused a halt in the supply of thermal coal, which in turn disrupted cement supply. It cannot be overlooked that construction investment may have been underestimated due to the economic downturn, possibly causing a sharp decline in material supply volume.

This year, assuming a 2.5% decrease in construction output, demand for major construction materials such as cement (-1.0%), ready-mixed concrete (-3.1%), aggregates (-1.1%), and rebar/steel bars (-1.9%) is expected to decline. However, demand for cement and aggregates is anticipated to soften its decline due to large-scale civil engineering projects like the 수도권광역급행철도 (GTX, Metropolitan Area Express Railway) and the Gadukdo New Airport.

Research fellow Park emphasized, "For the government to maximize the positive effects of various policies announced to revitalize construction investment, stable material supply must be a prerequisite," adding, "Cooperation between the construction and construction material industries should be strengthened along with forecasting capabilities, and fair competition should be encouraged."

Park Seongu, a research fellow at the Korea Construction Policy Institute, who presented the next topic, also noted that the construction market has experienced record-high inflation levels since the COVID-19 pandemic, proposing the development of a construction material forecasting system using big data as the top priority.

He further stressed the need to increase the proportion of self-supplied materials for construction use to normalize the supply of government-procured materials and to strengthen the management of defective materials. To resolve conflicts arising from material supply and price fluctuations, he suggested the establishment of a construction material supply consultative body. He recommended that this should be implemented alongside the introduction of regular market surveys for construction materials.

During the subsequent discussion, concerns were raised that supply imbalances could lead to a decline in construction quality. Um Youngjun, team leader of the Housing Technology Department at Korea Land and Housing Corporation (LH), said, "There was an unfortunate incident last year involving the collapse of an underground parking lot at an apartment construction site in Geomdan New Town, Incheon. I wonder if the unstable supply of materials also contributed (including the addition of defective materials)," adding, "If previously only construction periods were considered when material supply was unstable, it is now time to seriously consider fundamental quality issues."

The government acknowledged that the material industry is somewhat detached from the traditional construction industry, making conflict resolution difficult, but stated that efforts are underway to establish order in the material market. Woo Jeonghoon, director of the Construction Industry Division at the Ministry of Land, Infrastructure and Transport, said, "Although material price negotiations are a private sector matter, they also have a public aspect," adding, "Related agencies have formed an ad hoc committee to intervene when supply issues arise, and regular surveys will be conducted in the future through legal amendments."

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