(Seoul = Newsis) Reporter Hong Se-hee = The government has begun to control the supply and demand of major raw materials such as cement and ready-mixed concrete as the first step to stabilizing construction costs. The plan is to encourage autonomous price discussions between the cement, ready-mix concrete, and construction industries through the construction material supply and demand stabilization council.
However, the materials industry is expressing discomfort, saying that the government and the construction industry are only pressuring raw material prices to be lowered at a time when construction costs have rapidly increased due to increases in labor costs, financial costs, and land costs in addition to the rise in raw material prices.
The materials industry emphasizes that the problem is that it appears as if lowering the prices of cement and ready-mixed concrete will reduce construction costs, even though the cost of cement and ready-mixed concrete accounts for a very small portion of the apartment sales price. According to the industry, the cost of cement and ready-mixed concrete used for a 30 pyeong apartment is only 0.5 to 1.2% of the total sale price. Recently, a report by Korea Land and Housing Corporation (LH) was also released, saying, “When the price of cement is reduced by 10%, the cost of housing construction decreases by only 0.08%.”
Regarding the government’s formalization of support for overseas cement imports to stabilize cement prices, voices from not only the cement and ready-mix concrete industries but also the construction industry are saying, “It is not effective,” and “Isn’t this aimed at putting pressure on price reductions?” When it becomes possible to import Chinese cement, the options for buyers will increase, but the question is whether it will be possible to promote it as an “apartment using Chinese cement” when the quality is not guaranteed.
The cement industry is complaining that although the price of bituminous coal has recently fallen, electricity costs, which account for about 20% of manufacturing costs, have increased further, and management is facing great difficulties due to the enormous costs incurred in investing in environmental facilities to reduce carbon emissions. The ready-mix concrete industry is also complaining about the structural difficulties between cement and construction companies, saying that despite the rise in cement prices, the construction industry is only asking for price cuts without 100% reflecting the cost increase factors.
It is positive that the government is taking active steps to stabilize construction costs as there are concerns about delays in the supply of new housing in the city due to the rapid increase in construction costs. However, there is a need to reexamine whether the burden is being forced only on the material industry, which is suffering along with the construction industry due to the recession in the construction economy and sluggish domestic demand.
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Source: www.newsis.com
