Indonesia's Domestic Cement Sales Increased 7.6% in 2017
The Indonesian Cement Association (ASI) said cement sales in Indonesia grew by 7.6 percent year-on-year (y/y) to 66.4 million tons in full-year 2017. Widodo Santoso, Chairman of ASI, said cement sales rose in all regions across the country with the exception of Kalimantan and Sulawesi. As usual, the biggest cement consumer in 2017 was Java. This island accounted for 57 percent of total cement consumption in Indonesia in 2017, followed by Sumatra with 21 percent.
Domestic cement sales in Indonesia in 2017 were particularly supported by infrastructure development (including toll roads, bridges, irrigation, ports and airports). Also "strategic projects" accounted for a significant amount of cement last year. Such projects include power plants, smelters, petrochemical plants, and facilities for tourism.
Cement sales especially rebounded in the second half of 2017 after having contracted in the first half due to limited infrastructure development projects ahead of the Ramadan and Idul Fitri period.
Looking forward to 2018, Widodo is optimistic that cement sales continue to grow in line with rising infrastructure development (the government raised its infrastructure spending budget by 6.2 percent) and accelerating economic growth. Also the government's "One Million Houses" program will require plenty of cement. "A five percent growth in cement sales should be possible in 2018", Widodo said. The property sector, however, is estimated to remain sluggish and will therefore not be able to boost cement sales.
Read also: Cost Efficiency High on the Agenda of Indonesia's Cement Producers
However, conditions are still tough in Indonesia's cement industry due to the massive oversupply situation. The nation's combined total installed cement production capacity has nearly reached 110 million tons, while domestic cement demand only reached 66.4 million tons in full-year 2017. Fierce competition puts serious pressure on cement prices. Widodo hopes that the central government will temporarily disallow the establishment of new cement factories until there is a healthier balance between supply and demand.
Indonesian Cement Sales 2008-2017:
Source: Indonesian Cement Association (ASI)
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