South Korea's cement makers are learning that the ground beneath their industry has shifted and may not settle for some time. The Korea Cement Association now expects domestic demand to remain below 40 million tons until 2029, a long stretch after decades in which that volume was routine. Behind the forecast lie a steep fall in housing starts, plants idling at roughly half their capacity, and a looming bill for environmental equipment that the firms can barely afford. Whether the sector finds a new footing will depend on a recovery that the numbers do not yet show.
South Korea's Cement Demand Seen Below 40 Million Tons Through 2028 as Capex Shrinks and Environmental Costs Mount
Eleven million tons of demand disappeared in two years
Mark
Why does 40 million tons matter so much?
Mimi
It's a threshold the industry lived above for over thirty years. Last year was the first time in 34 years shipments fell below it, and the forecast keeps them there through 2028.
Mark
And the drop from 2023 was sharp.
Mimi
From 50.24 million tons to 38.25 million in two years, a 23.9% fall.
Mark
Why is low utilization such a problem?
Mimi
Kilns are expensive to restart, so they keep running. Plants are at roughly 46% to 59% utilization, and fixed costs per ton rise as output falls.
Luke
Worth noting these forecasts come from the industry association itself, and they're projections, not outcomes. The 2025 onward numbers are estimates.
Mark
What about the September housing starts?
Mimi
Down about 43% in the Seoul area and 50% outside it. The association says cement input peaks nine months after groundbreaking, so next year feels it.
Luke
But January-September starts were up 0.8%, partly a base effect. The signal is mixed, and the nine-month lag is the association's own analysis.
Mark
How heavy is the environmental bill?
Mimi
More than 5 trillion won is estimated for the 2035 target, plus 30 to 40 billion won per kiln for SCR equipment. This year 89.5% of planned capex is already earmarked for upkeep and compliance.
Luke
The 5 trillion figure is an estimate, and the story doesn't say how it will be split or who pays. Whether stocks re-rate after 2029 is observers' speculation, not a finding.
Il Polso
- Cement demand fell below 40 million tons in 2024 for the first time in 34 years, and the drop from the 2023 peak was nearly a quarter in two years.
- Housing starts collapsed by more than 40 percent in September, and because cement is consumed about nine months after groundbreaking, the pain is still ahead.
- Plants are running at roughly half capacity, so kilns sit idle while fixed costs per ton keep climbing.
- Operating profits at firms such as Hanil Cement have fallen by about half, leaving little room to absorb new spending.
- Most capital spending now goes to mandatory environmental and maintenance upgrades, and CCUS and SCR equipment costs threaten to outpace what companies can fund.
- Forecasters project a return above 40 million tons only in 2029, and the outcome depends on how weaker producers survive until then.
South Korea's cement makers are learning that the ground beneath their industry has shifted and may not settle for some time. The Korea Cement Association now expects domestic demand to remain below 40 million tons until 2029, a long stretch after decades in which that volume was routine. Behind the forecast lie a steep fall in housing starts, plants idling at roughly half their capacity, and a looming bill for environmental equipment that the firms can barely afford. Whether the sector finds a new footing will depend on a recovery that the numbers do not yet show.
South Korea's cement industry has been handed a forecast that puts the 40 million ton mark out of reach for four straight years. The Korea Cement Association's 2026-2030 outlook shows demand at 38.71 million tons this year, rising slowly to 39.68 million in 2028 before crossing back over in 2029. Even the 2030 projection falls short of what the country shipped in 2024.
The decline has been steep. Shipments that stayed above 40 million tons for more than three decades have dropped by nearly a quarter since their 2023 peak. Housing starts in September fell by more than 40 percent in the Seoul area and in the rest of the country, and because cement is used about nine months after groundbreaking, that weakness will reach next year's demand.
Plants are operating at about half their capacity, and the companies cannot easily idle kilns without costly restarts. Profits have fallen sharply at firms such as Hanil Cement, whose operating profit dropped by more than half last year.
The bigger strain comes from environmental obligations. Carbon capture facilities and nitrogen oxide controls will cost trillions of won in total, and most of the industry's recent investment has already gone to compliance. The association warns that delaying these upgrades will only make the burden heavier. Researchers and industry voices are also urging a shift away from price-driven competition toward stronger materials and quality. What remains to be seen is whether demand truly recovers after 2029, and how the weaker producers will keep pace with the spending required before then.
South Korea's cement industry has been told what its next few years look like, and the number it should keep in mind is 40 million tons. The Korea Cement Association released its 2026-2030 demand forecast on the 15th, and it shows annual demand staying below that line for four straight years, through 2028. Only in 2029 does it climb back over.
The association projects 38.71 million tons this year, up 1.2% from 38.25 million tons last year. Next year it sees 39.65 million tons, a 2.4% rise, then 39.68 million in 2028, 40.99 million in 2029 and 41.90 million in 2030. Even the 2030 figure sits below actual shipments in 2024.
The slide behind those numbers is steep. Domestic shipments stayed above 40 million tons for more than three decades after 1991, when they were 37.11 million tons. Last year they dropped under that mark for the first time in 34 years. From a peak of 50.24 million tons in 2023, 11.99 million tons, or 23.9%, disappeared in two years. The 2030 forecast is 16.6% below 2023 and about two-thirds of the all-time high of 61.75 million tons, set in 1997.
Leading indicators offer little relief. The Ministry of Land, Infrastructure and Transport reported September housing starts of 9,308 units in the Seoul metropolitan area and 6,738 outside it, down 43.3% and 50.2% from a year earlier. The association's analysis finds cement input peaks about nine months after groundbreaking, so that drop will weigh on next year's demand. Cumulative January-September starts were up 0.8% nationwide, partly because September last year was unusually heavy.
Plants are running at about half capacity. In the first half of this year, Hanil Cement's utilization was 58.9%, Sampyo Cement's 52.3%, Sungshin Cement's 50.9% and Asia Cement's Jecheon plant's 45.9%. Kilns are costly to restart once shut, so companies have little room to idle them, and fixed costs per ton climb as utilization falls.
Earnings show it. Hanil Cement's consolidated operating profit last year was about 132.7 billion won (roughly $99.3 million), down 51.1%. Asia Cement and Sampyo Cement fell 45.1% and 26.3%. In the first half of this year, Asia Cement earned about 35 billion won, down 30.8%, and Sampyo about 21.7 billion won, down 28.9%. Ssangyong C&E, the industry leader, posted cement division revenue of 834.1 billion won in January-September, down 8.4%.
The industry's larger worry is the cost of environmental compliance. Meeting the 2035 Nationally Determined Contribution is estimated to need more than 5 trillion won for carbon capture, utilization and storage facilities and similar equipment. When the Integrated Environmental Permit System is fully implemented next year, companies will also need selective catalytic reduction equipment to cut nitrogen oxides, at 30 billion to 40 billion won per kiln.
Capacity to pay is thin. Average annual capital spending from 2021 to 2025 was 506.1 billion won, above average annual net profit of 420 billion won, and 85% went to environmental compliance. Capex peaked at 578.8 billion won in 2024, fell to 472.6 billion won last year and is planned at 429.7 billion won this year. Of that, 384.4 billion won, or 89.5%, goes to maintenance, environmental and safety upgrades, and energy savings, leaving almost nothing for new businesses or competitiveness. The association warns that delayed investment could make the compliance burden snowball later.
Kim Jin-man, a professor at Kongju National University, says Korean cement prices are the lowest among major countries relative to income. He argues that continued lowest-price, volume-driven dealing will erode investment capacity and expertise and damage quality credibility, and he wants the government to create conditions for the structural materials industry to grow.
The forecast uses a new model built over five months with the Korea Cement Advanced Materials Research Association and the Korea Institute of Construction Industry Research. It uses construction put in place rather than construction investment as its explanatory variable; for 2010-2025 the correlation with cement demand was 0.72 versus 0.66. Kim Eui-chul of the research association says it will be recalibrated quarterly. What to watch is whether demand truly recovers after 2029, and how weaker producers fund CCUS and SCR spending before then.
Citazioni salienti
If lowest-price, volume-driven transactions continue, investment capacity and expertise will decline and quality credibility will suffer, creating a vicious cycle.— Kim Jin-man, professor, Kongju National University
The forecasting system will be continuously calibrated using quarterly results in line with market and policy changes.— Kim Eui-chul, managing director, Korea Cement Advanced Materials Research Association
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