South Korea: A rift between South Korea's construction, cement and ready-mixed concrete companies deepened yesterday as a series of price negotiations ended in stalemate with all sides refusing to compromise.
Squeezed by soaring raw cement costs, some 750 manufacturers of premixed concrete across the country halted production on 22 February 2012, saying they are only losing money by running their plants. They demand that builders accept an 8% increase in prices of ready-mixed concrete and that cement suppliers withdraw a recent 11% increase. They had been prepared to negotiate a lower increase, but two rounds of three-way talks convened by the government have failed to break the impasse. This has seen scores of construction projects put at risk as trucks remain idle.
"Things are not working out because all sides are not willing to step back," said Bae Jo-woong, head of the Korea Federation Ready-mixed Concrete Industry Cooperatives' (CIC) emergency committee and chief executive of Kookmin Remicon. Other officials at the CIC say that the current rates leave no margin for concrete producers and do not reflect sharp growth in cost of coal, sand, gravel and other raw materials seen in 2011.
The CIC argues that while cement manufacturers secured an 11% price hike on 1 January 2012, ready-mixed concrete makers were only allowed to raise their prices by less than 4%. "It made sense to push up cement prices that had been exorbitantly cheap. The recent increase will keep the cement firms afloat but the problem now is that construction companies are resisting raised ready-mixed concrete prices," said Park Jong-rok, an analyst with a Seoul-based brokerage.
