Cement sales in Indonesia climbed 4.7 percent (y/y) to 6.1 million tons in November 2015 supported by rising cement sales in all regions apart from the Moluccas and Papua. Widodo Santoso, Chairman of the Indonesian Cement Association (ASI), said domestic cement demand rose sharply in November despite seeing some rainfall (which usually leads to delays in development of infrastructure and other construction projects). Santoso says this rise is due to improved government spending on infrastructure projects.
Growth in cement sales were highest on Sulawesi, Bali & Nusa Tenggara and Sumatra as demand rose due to the start of power plant and smelter construction in these regions.
Year to date, Indonesian cement sales stand at 55.6 million tons in the January-November 2015 period, up 1.9 percent from the same period last year. Santoso expects cement sales to remain strong in the last month of the year, hence full-year cement sales may reach 61.5 million tons, up 2.5 percent (y/y) from 60 million tons in 2014.
Optimism about the cement industry also stems from the start of two new cement factories: Semen Jawa (with an annual cement production capacity of 1.7 million tons) and Semen Merah Putih (annual production capacity of 3.6 million tons). Furthermore, Semen Bosowa and Semen Bima are also expected to expand production capacity before the year-end. In the first quarter of 2015, many domestic cement producers curtailed output as demand had weakened. In the first half of the year cement demand mostly originated from the property sector, not from major infrastructure projects.
Indonesian brokerage Danareksa Sekuritas expects cement sales to grow further in 2016 due to the government's push for infrastructure development. However, the country's property market is expected to remain sluggish and therefore growth of cement sales will most likely not see double-digit growth.
Indonesian Cement Sales 2008-2015:
|Year|| Cement Sales
|| YoY Growth
¹ ASI forecast
Source: Indonesian Cement Association (ASI)