Indonesia cement sales continue to fall

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Indonesia: Cement sales for the first seven months of 2015 have continued to decrease. Weak demand, in addition to the Eid al-Fitr holiday period, caused national cement sales for July 2015 to fall by 4.2% year-on-year to 31.3Mt.

Regions with the largest cement consumption drop for July 2015 were Bali and Nusa Tenggara, which saw a 26.5% drop to to 214,540t, Kalimantan with a drop of 23.6% to 208,939t, Java with a 13.9% decrease to 1.79Mt and Sumatra with a drop of 3.3% to 726,000t.

Widodo Santoso, chairperson of the Indonesian Cement Association, is optimistic that cement sales and consumption will increase in the second half of 2015 as the government starts actualising its budget to boost the infrastructure sector. Santoso said that the cement industry would gain 11Mt/yr of additional production capacity from the operation of four new plants from Semen Bosowa, Holcim Indonesia, Semen Merah Putih, Semen Jawa and Semen Conch. The additional cement supply and weakening of cement demand may cause oversupply in the cement industry and create higher competition.

Meanwhile, Semen Indonesia has revised its domestic cement sales growth target to 0% from the initial target of 5%, in line with weak demand in the cement market in the first half of 2015. Agung Wiharto, corporate secretary of Semen Indonesia, said that unsupportive macroeconomic conditions, depreciation of the Indonesian Rupiah and the weakening of commodity prices affected the company's sales for the first semester. Its sales volume for the first half of 2015 decreased by 4.2% year-on-year.

"Semen Indonesia's sales volume in several regions was affected by tight competition with new players and new plants," said Wiharto. He added that he expects the domestic cement market to improve in the third quarter of 2015, in line with actual infrastructure developments to boost cement demand in the private and retail sectors. "Cement sales are expected to again grow by 6 - 8% in 2016 if infrastructure developments continue." Semen Indonesia plans to resume several cement plant expansion projects in Rembang and Padang to meet cement demand growth in the future. The plants in Rembang and Padang will each have capacities of 3Mt/yr.

Last modified on 12 August 2015

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