Cement Consumption in Indonesia Rises Ahead of Year-End
Demand for cement in Indonesia is rising ahead of the year-end. Growing cement demand is attributed to the speeding up of construction of several national strategic infrastructure projects. Widodo Santoso, General Chairman of the Indonesian Cement Association (ASI), said cement consumption in Indonesia rose 12.5 percent year-on-year (y/y) to 6.76 million tons in October 2017.
Meanwhile, in the January-October 2017 period, Indonesia's cement consumption expanded 7.3 percent (y/y) to 54.19 million tons. Therefore, ASI is optimistic that cement demand in full-year 2017 can touch a growth pace of around 7 percent (y/y) equal to 67 million tons of cement. The reason why this growth pace is expected to slide slightly in the last two months of the year is because of looming bad weather (in the rainy season) that disturbs progress on construction of the infrastructure projects.
Read more: Overview of Indonesia's Cement Industry
ASI further informed that cement demand rose sharply across most regions of Indonesia in October 2017 with the exception of the island of Sulawesi.
Stakeholders in Indonesia's cement industry are optimistic that cement sales will rise further next year as the central government announced to raise its budget for infrastructure spending (and spending on national strategic projects) by 6 percent in the 2018 State Budget.
In terms of cement exports from Indonesia, there is also good growth visible so far in 2017. Considering Indonesia's installed annual cement production capacity has expanded rapidly in recent years (reaching beyond 100 million tons), while cement consumption in Indonesia may not touch 67 million tons, there exists a structural supply glut (which puts pressure on cement prices and cement companies' corporate earnings). Hence, a focus on cement exports would be a great solution.
Read more: Cement Industry of Indonesia Plagued by Oversupply Woes
Indonesia's cement and clinker exports in October 2017 rose 38 percent (y/y) to 273,000 tons. This is steep growth although coming from a low base. Meanwhile, in the January-October 2017 period exports reached 2.28 million tons, not far from ASI's full-year target of 2.5 million tons.
Indonesian Cement Sales 2008-2017:
Source: Indonesian Cement Association (ASI)
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