However, the 32 percent month-to-month decline is not as alarming as it may seem at first sight because in August there was an almost two-week holiday (the Idul Fitri or Lebaran festivities that follow after the holy fasting month of Ramadan). The 5.8 percent weakening (YoY) in August, on the other hand, is a figure that provides a better view of the current state of Indonesia's cement sector and thus also informs about the country's infrastructure and property sectors. Yesterday, Fitch Ratings released a report in which it predicts slowing growth in Indonesia's property sector in the next 12 months ahead (although on the longer-term the institution still labels Indonesia as attractive).

The table below indicates that in the period January to August 2013 Indonesia's cement sales still posted growth compared to the same period last year. However, this growth rate is much slower compared to sales in the previous years. In full-year 2011, cement sales grew about 17 percent, while in 2012 sales growth slowed down to 13 percent.

Domestic Cement Sales  
in million tons
         34.3          36.2   +5.7%
Domestic Sales + Export
in million tons
         34.4          36.6   +6.3%

Source: Indonesian Cement Association

Export of cement increased 2.4 percent to 95 thousand tons in August 2013 from the same month a year earlier. Cement exports have fallen significantly in recent years as Indonesian cement producers have been focused on supplying cement to the domestic market.

Although Widodo Santoso, chairman of the Indonesian Cement Association (ASI), expects domestic cement sales to grow strong in September 2013, even surpassing the result of the same month in 2012 due to various public infrastructure projects and private property projects, this year's growth target of cement sales has been cut to 7.5 percent from the original projection of 10 percent. Major factors for this downgrade in cement sales in 2013 are higher interest rates, a weakening rupiah and the increase in prices of subsidized fuels since late June 2013.

 Growth (YoY)
 Market Share
Semen Indonesia           16.0        +16%        43.8%
Indocement           11.1         0.0%        30.4%
Holcim            5.2        -2.9%        14.2%
Semen Baturaja           0.74       -10.7%         2.0%

¹ in million tons
Source: Indonesian Cement Association

Total Cement Production and Consumption of Indonesia:

     2010    2011    2012    2013
Cement Production   
in million tons
   37.8    52.0    60.6    65.0¹
Cement Consumption
in million tons
   40.8    48.0    55.0    61.0¹

¹ indicates a forecast
Source: Indonesian Cement Association