The Sapporo Ready-mixed Concrete Cooperative (Sapporo Kyogumi) has decided to raise the price of ready-mixed concrete by 25% per cubic meter starting in April next year, bringing the cost to a record high of ¥25,000. This ¥5,000 increase is the largest since the cooperative’s establishment in 1972. In addition to rising raw material costs, including cement, the price hike is also driven by higher transportation costs due to Japan’s “2024 logistics crisis.” Around 80% of other cooperatives in Hokkaido have also implemented or plan to implement similar price increases, signaling a continued rise in construction costs throughout the region.
The ready-mixed concrete industry is allowed to set unified prices through cooperatives made up of local manufacturers, as part of a framework aimed at protecting small and medium-sized enterprises. The Sapporo cooperative raised prices by ¥2,200 in 2021 and ¥4,500 in 2023. By April 2025, the total increase over five years will amount to ¥11,700, nearly doubling the price.
One of the main drivers behind this price increase is the rising cost of cement, which has been affected by the persistently high price of coal used in its production. Japan’s three major cement manufacturers have already announced price hikes starting in April next year. Additionally, the enforcement of stricter overtime regulations in the transportation industry, which began this April, has exacerbated the shortage of drivers for concrete mixer trucks, leading to further increases in transportation costs. Shinichi Narita, Chairman of the Sapporo Cooperative, explained, “We determined that passing on the costs is crucial in order to facilitate wage increases across the supply chain.”
Price increases are occurring across Hokkaido. Out of the 28 cooperatives outside of Sapporo, 22 have either already raised prices or plan to do so between January this year and April next year.
While ready-mixed concrete typically accounts for only a small percentage of total construction costs in typical reinforced concrete buildings, it is used in a wide range of construction projects, so the impact of price hikes is expected to be far-reaching. A representative from a major real estate company noted, “After April next year, price increases for condominiums will be inevitable. The cost situation will also become even more challenging for hotels and office buildings.”
CEO of Niseko Real Estate Company’s Perspective
In the current Niseko market, the average price per tsubo for wooden structures is ¥2 million, while reinforced concrete (RC) structures range from ¥2.5 million to ¥3 million. This is about 1.25 to 1.5 times the cost in Sapporo. Seven years ago, the price per tsubo for wooden structures was ¥600,000 in Sapporo and ¥800,000 to ¥1 million in Niseko. Prices continue to rise with no end in sight.
Several factors contribute to the current rise in the price of ready-mixed concrete. The main reasons are as follows:
Rising raw material costs: The prices of key materials such as cement, sand, and gravel, which are essential for ready-mixed concrete, have increased. The cost of extracting limestone for cement and transporting sand and gravel has surged. Environmental regulations aimed at resource conservation also play a role.
Increasing energy costs: Ready-mixed concrete production requires significant energy, and rising fuel and electricity costs are directly impacting the price. Global spikes in crude oil and natural gas prices are particularly affecting production costs.
Rising labor costs: Labor shortages across the construction industry, especially for skilled workers, are driving up wages and benefits, further contributing to the price of concrete.
Rising transportation costs: Transporting ready-mixed concrete requires trucking, and higher fuel costs along with labor shortages in the logistics sector have led to increased freight charges.
Increased demand: With rising construction demand both domestically and internationally, there is heightened pressure on the supply-demand balance, further inflating prices. Large-scale projects such as urban redevelopment and infrastructure improvements are intensifying supply shortages.
These factors combined are driving the upward trend in ready-mixed concrete prices.
Looking ahead, it is unlikely that prices will decrease. In this environment, selecting a contractor who understands Niseko well and has the knowledge and experience to minimize unnecessary costs from the planning stage is essential when building.
2023/6/18 update
2023/10/25 update
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