9th Negotiation Also Fails... Remicon Unit Price Adjustment in Uncertainty

Difference of 93,000 KRW and 94,000 KRW Remains
Calls for Government Mediation Emerge

The construction industry and the ready-mixed concrete (remicon) industry, which are negotiating over the adjustment of remicon prices, are struggling to narrow their differences. If the negotiations drag on, it could lead to delivery stoppages and disruptions at construction sites. Some are even calling for government intervention.

Yonhap News

According to related industries on the 25th, the Youngwoo Association, composed of representatives from the Korea Construction Materials Workers Association (Geonjahui) and remicon manufacturers, held the ninth price negotiation for nearly four hours from 2 p.m. the previous day but ultimately failed to reach an agreement. Initially, the construction industry demanded a reduction of 3,500 KRW from the metropolitan area price to 90,200 KRW, while the remicon industry insisted on a 1,400 KRW increase to 95,100 KRW. In the first negotiation, the Youngwoo Association proposed freezing the current metropolitan area price (93,700 KRW per 1㎥) for two years, but Geonjahui rejected this, causing a breakdown. In subsequent talks, the Youngwoo Association proposed 93,000 KRW, a 700 KRW reduction from the current price, while Geonjahui suggested 94,000 KRW, a 3,300 KRW reduction, but these offers were also rejected. They are narrowing the gap but still have differences. A Geonjahui official said, "It is unclear when the next negotiation will take place," adding, "First, we will explain the results reached today to member companies at tomorrow's general meeting, gather opinions, and decide on the next steps."

Each industry is requesting remicon price adjustments for different reasons. The construction industry argues that due to years of industry recession, construction is impossible without lowering cement and remicon prices. According to Statistics Korea, the domestic construction contract amount (current) last year was 188.7121 trillion KRW, a 3.94% decrease compared to 196.4477 trillion KRW in 2021, three years ago. Another reason cited by the construction industry is the recent stabilization of once soaring thermal coal prices. Thermal coal is an essential raw material accounting for about 30% of the production cost of cement, the main ingredient of remicon. The construction industry claims that since thermal coal prices have recently fallen, there is sufficient room to reduce cement prices, and remicon prices should be set accordingly. The price of thermal coal (CFR Northeast Asia, 5750 kcal/kg NAR) was 61 USD per ton in 2020, surged to 215.97 USD in 2022 after the Russia-Ukraine war began, and dropped to 99.59 USD in February this year.

On the other hand, the remicon industry argues that despite the drop in thermal coal prices, transportation costs, labor costs, electricity fees, and exchange rates have all risen, effectively negating the impact of the thermal coal price decline. Furthermore, since the cement industry refuses to lower prices, the remicon industry cannot participate alone in price reductions. Geonjahui sent a price negotiation letter to cement manufacturers last September demanding price cuts, but the cement industry did not respond, citing exchange rate increases and other reasons. A Korea Ready-Mixed Concrete Industry Association official said, "Even if thermal coal prices have fallen, the remicon industry cannot reduce prices as long as cement prices remain unchanged," adding, "It is appropriate to reflect remicon costs once some compromise and price adjustment are made with the cement industry."

With the cement industry, which holds the key to negotiations, remaining immovable, the conflict appears to be entering a prolonged phase. Currently, both the construction and remicon industries are firmly opposing each other, citing difficulties in negotiating with the cement industry. The construction industry is pressuring the remicon industry to lower prices, while the remicon industry insists on "cement price reductions first" in response.

An industry insider said, "Since cement cannot be imported, the negotiating power of both the construction and remicon industries is quite weak. If this continues, problems such as construction stoppages may occur, so I think the government should step in to some extent and act as a mediator in the negotiations."

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