TOKYO REPORT: Japan’s Cement Demand Keeps Falling as Construction Stalls

Tokyo, April 20 (Jiji Press)–In Japan, demand for cement, a key component of concrete, shows little sign of bottoming out. According to the Japan Cement Association, domestic demand in fiscal 2026, which runs through March next year, is projected to fall to 30 million tons, below the 31.05 million tons recorded in fiscal 1964, when Tokyo hosted the Olympic Games for the first time. The decline reflects not only shrinking demand for construction, but also a deepening slowdown in construction activity caused by labor shortages and work-style reforms that have capped overtime hours. Concerns are also growing that a weakening cement industry could undermine industrial waste recycling, as cement production plays a vital role in processing such waste. It could also hamper recovery and reconstruction efforts in the event of a major disaster. Work-Style Reform According to statistics from the Japan Cement Association, domestic cement demand in Japan was under 5 million tons in fiscal 1950. As the nation entered a period of rapid economic growth, demand topped 10 million tons in fiscal 1956 and surpassed 50 million tons in fiscal 1969, eventually reaching a record 86.28 million tons in fiscal 1990. Since then, however, demand has been on a long downtrend. The decline intensified after the collapse of U.S. investment bank Lehman Brothers in September 2008, which triggered a global financial crisis, and after the now-defunct Democratic Party of Japan took power in 2009 and curbed public works spending under its slogan of shifting expenditures “from concrete to people.” Demand picked up temporarily during reconstruction following the March 2011 earthquake and tsunami, but the recovery proved short-lived. In fiscal 2024, domestic demand fell for the sixth straight year, to 32.65 million tons. In recent years, the effects of work-style reforms have become increasingly evident, an industry official said. Since April 2024, overtime at construction sites has been subject to legal caps, with a five-day workweek becoming more common across the industry. As a result, construction projects are taking significantly longer to complete. “Projects that once took a year to finish now take a year and a half,” one industry source said, adding that the shift has further dampened demand for cement. Unlike the declines seen in the 2000s, which were driven largely by economic downturns, the current slump is widely viewed as structural, limiting the chances of a rapid recovery. Against this backdrop, Mitsubishi Ube Cement Corp. will halt production in the No. 2 area of its Kyushu plant in the town of Kanda, Fukuoka Prefecture, at the end of March 2027. The company plans to convert the site into a recycling hub for waste plastics and other materials. Tokuyama Corp. is also reducing its production footprint, including by suspending some facilities at its Tokuyama plant in Yamaguchi Prefecture. In March, the company announced plans to sell its cement sales business to Taiheiyo Cement Corp. Expanding Exports The cement industry makes extensive use of industrial by-products as raw materials, including steel slag from steel mills and coal ash from thermal power plants. It also recycles waste plastics and other materials as fuel in the manufacturing process. Industry officials warn that a decline in cement production could eliminate a key outlet for these waste materials. There is also growing concern that the industry may be unable to respond adequately to a sudden surge in demand for recovery and reconstruction supplies following a major disaster, according to a source familiar with the matter. With the two-day weekend now widely accepted as standard practice–“a given,” in the words of a senior executive at a major company–there appears to be little chance of work-style reforms at construction sites being rolled back. At the same time, construction work continues to rely heavily on the skills and experience of individual engineers, while efforts to boost productivity through digital technology have proved challenging. As a result, any meaningful recovery in demand remains difficult. Masako Sasahara, a senior research analyst at Meiji Yasuda Asset Management Co., said the decline in domestic cement shipments is likely to continue for the time being. “The drop in shipments caused by work-style reforms will probably persist for a while,” said Sasahara, an industry expert. “However, replacement demand and new demand tied to public infrastructure and other projects should eventually help put a floor under the decline.” Saying that “cement demand is expected to increase in the United States, Australia and Southeast Asia,” Sasahara expressed belief that expanding exports, a priority for major Japanese manufacturers in recent years, will be essential to sustaining domestic cement production. END [Copyright The Jiji Press, Ltd.]