Faced with the dual pressures of soaring raw material prices and the continued slump in the construction market, the Korean cement industry is being forced to adopt an emergency strategy of "export to ensure production". Behind this seemingly positive export growth, it reflects the deep crisis facing the industry-the export business is almost unprofitable because of the high cost of cement transportation, but companies have to continue to expand overseas sales in order to maintain the operation of factories. Cement exports are expected to reach 4.5 million tons this year, up 52% from a year earlier, according to the
Korea Cement Association. In sharp contrast, domestic cement shipments are expected to fall to 36.5 million tons, the lowest level in 34 years, down 16.5% year-on-year. This increase and decrease data clearly reveals the grim situation of the local market. The operating conditions of
major enterprises confirm this trend. Domestic cement sales of Ssangyong C & E, the largest exporter, fell from 1.3887 trillion won in 2023 to 1.2884 trillion won in 2024, while exports continued to grow from 100.2 billion won in 2023 to 106 billion won in the first three quarters of this year. Hanla Cement Group decided to expand its export market from Peru, Chile and other Latin American countries to Cameroon, Guinea and other African regions after holding an emergency business strategy meeting, and its export volume increased by 63% year on year this year. Miura Cement also signed export contracts with South American customers in the second quarter of this year.
It is noteworthy that this export expansion is not a benign development. Cement itself has heavy weight and high transportation costs, while the adjacent Southeast Asian market has been occupied by Chinese and Vietnamese enterprises, and Korean enterprises can only choose the Latin American and African markets farther away. With the increase of transportation distance, export profits are almost swallowed up by logistics costs. Industry insiders said frankly: "The current domestic economic situation is comparable to the IMF crisis, but in order to maintain the operation of the factory, the backlog of cement has to be shipped overseas.". In addition, in order to maintain the carbon emission quota base, kilns must be kept running, and exports can cover at least part of the fixed costs.
Geographical location has become a key factor. The factories of Ssangyong C & E, Hanla Cement and Miura Cement are all located in coastal areas, which saves land transportation links compared with inland enterprises, giving them a glimmer of survival in export. For inland enterprises, the cost pressure of sea-land intermodal transport makes it difficult for them to use exports as a buffer.
Industry forecasts show that South Korea's cement demand will further decline to 36 million tons next year, down 1.3% from the same period last year. As the fundamental reason for the shrinking demand is that the construction market continues to be depressed, it is difficult for the industry to see the dawn of recovery in the short term. This "loss-making export" mode of survival will become the norm that Korean cement enterprises have to face for a long time.
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