South Korea's cement industry says it has no meaningful management option beyond cutting energy costs. Domestic cement demand has plunged to levels not seen in four decades amid a prolonged construction slump, while a second blockade of the Strait of Hormuz is pushing international crude oil and LNG prices higher once again.
Fossil fuels such as bituminous coal account for more than 25 percent of cement manufacturing costs, with electricity adding another 20 to 25 percent. Energy price volatility is squeezing the industry's cost structure at a time when demand is already weak.
The issue was raised last month at the 2026 Cemtech Asia international cement technology seminar held in Bangkok, Thailand.
Harry Murphy Cruise of Oxford Economics, who covers global trade, said a prolonged blockade of the Strait of Hormuz could push international crude prices to between $130 and $160 per barrel. He also warned that exports of Qatari LNG used for power generation could be cut off. That, he said, could trigger a construction industry downturn that feeds into reduced construction investment and falling cement demand — a vicious cycle.
South Korean cement makers plan to respond by expanding their use of circular resources such as waste plastics and waste tires in place of bituminous coal. They are also focusing on increasing the share of waste-heat power generation, which recovers heat produced during cement production to generate electricity. Sampyo Cement, KGM C&E, Hanil Cement, Asia Cement, Sungshin Cement and Halla Cement are all pursuing these initiatives.
"Last year, domestic cement demand fell back to levels last seen 40 years ago," a Korea Cement Association official said. "There is no real management option other than continuing to raise the fossil fuel substitution rate and lowering energy costs through waste-heat power generation."
freiheit@heraldcorp.com
