Cement sales in Indonesia grew by seven percent to 32.9 million tons in the period January to July 2013. This pace of growth is significantly lower compared to the double-digit cement growth rate last year and thus forms another sign of cooling economic growth in Southeast Asia's largest economy (cement sales are a good indicator to measure the state of economic growth of a country). A slowdown in domestic cement sales is likely to continue in the second half of 2013, partly due to a decline in infrastructure projects.
Java, Indonesia's most populous island, continues to account for the largest share of the country's cement demand as the island is center of most infrastructure and residential development projects.
Although the seven percent growth rate (YoY) between January and July 2013 is much lower than last year's result, it is still higher than Indonesia's economic growth of about six percent. Total domestic cement sales in 2013 are expected to amount to 60 million tons, equivalent to an eight percent rise compared to sales in 2012. This figure is down from the initial target of a 10 percent growth rate. Higher prices of subsidized fuels (giving rise to high inflation) and higher interest rates impact on cement sales.
To counterbalance weakening domestic sales, Indonesia's cement exports have increased more than ten times to 95,000 tons in July 2013 according to the Indonesian Cement Association (ASI). The country's annual cement production capacity has grown to 64.5 million in late July from 60.5 million tons at end-2012.
in million tons
in million tons
¹ indicates a forecast
Source: Indonesian Cement Association