Indonesia's cement sales totaled 61 million tons in 2015, up 1.8 percent from sales in 2014. Although the pace of growth is limited, the final result was well received by stakeholders and policymakers because in the first half of 2015 the nation's cement sales growth still stood at -1.5 percent on a year-on-year basis due to a delay in government-led infrastructure development. In the second half of the year there occurred a surge in infrastructure development projects, hence triggering higher cement sales.
However, Widodo Santoso, Chairman of the Indonesian Cement Association (ASI), emphasized that Indonesia's cement producers have to do their homework and analyze the current environment because the large rise in the nation's cement production capacity was not accompanied by a large surge in cement demand. Santoso said 16 million tons are to be added to the country's total installed cement production capacity in the years 2015-2016 due to the construction of seven new cement plants (it is estimated that Indonesia's total installed cement production capacity stood at 77 million tons at the start of 2015).
Santoso added that he would like to see the Indonesian government curtail cement imports from Thailand and Taiwan as such imports only exacerbate the domestic oversupply. Secondly, Santoso requests the government to be careful with handing out new permits for the establishment of new cement companies and factories in Indonesia.
Meanwhile, Indonesian cement companies have been unable to boost their export performance as global demand for cement remains sluggish amid weak global growth. Moreover, China has been experiencing a major cement oversupply and therefore is able to export cement at very competitive prices.
Read Analysis: Overview of Indonesia's Cement Industry
Indonesia's cement sales in 2016 are expected to rise 4-6 percent (y/y), according to Santoso, on the back of government-led infrastructure development. In Indonesia, infrastructure development typically accounts for 25 percent of Indonesia's total cement demand. In the 2016 State Budget the Indonesian government set aside more than IDR 300 trillion (approx. USD $21.6 billion) for infrastructure development, up 20 percent from the previous budget. The remaining 75 percent of cement demand originates from the construction sector (such as housing, apartments, office space, and hotels).
Indonesian Cement Sales 2008-2016:
|Year|| Cement Sales
|| YoY Growth
¹ ASI forecast
Source: Indonesian Cement Association (ASI)
Semen Indonesia, the country's largest cement producer, managed to raise its market share to 44 percent in December 2015 from 43.1 percent in the preceding month. Its main competitors are Indocement Tunggal Prakarsa, Holcim Indonesia, and Semen Baturaja.