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Cement consumption continued to improve in Indonesia in August 2017 on the back of rising demand from Java and the eastern region of Indonesia. Widodo Santoso, Chairman of the Indonesian Cement Association (ASI), said Indonesia's cement consumption rose 9 percent year-on-year (y/y) to 6.47 million tons in August 2017.
Meanwhile, in the January-August 2017 period cement sales in Indonesia accumulated to 41.1 million tons, up 5.6 percent (y/y) from cement sales in the same period one year earlier. Santoso informed that most regions across Indonesia showed rising demand for cement (with the exception of Kalimantan and Nusa Tenggara).
Rising cement consumption across most regions of Indonesia is attributed to infrastructure development. Santoso said infrastructure development projects are beginning to show good progress on Java, Sumatra, Sulawesi and the eastern part of Indonesia and therefore require more supplies of cement.
Highest growth of cement consumption was recorded on Java, the island that, traditionally, forms Indonesia's largest cement consumer. In August 2017 cement sales on Java rose 14 percent (y/y).
Meanwhile, exports of cement and clinkers from Indonesia showed even more impressive growth (although coming from a low base). According to data from ASI, exports of Indonesian cement and clinkers rose 120 percent (y/y) to 412,000 tons in August 2017. Combined, during the first eight months of the year, exports of cement and clinkers are up 78 percent (y/y), accumulating to 1.85 million tons.
Sharply rising exports are the result of Indonesian cement producers' efforts to boost sales. Starting from 2013 domestic cement sales started to slow significantly as Indonesia's property market cooled. Initially, this slowdown did not impact too drastically on local cement producers. However, in the years 2013-2017 several new cement manufacturers (including foreign ones) entered the Indonesian market, while existing companies invested in the expansion of their production facilities. A huge cement oversupply situation was created on the Indonesian market that put downward pressure on cement prices. Therefore, starting from 2016 local cement manufacturers started to turn to export markets in a bid to improve their corporate earnings.
Rising exports and rising domestic consumption on the back of infrastructure projects are hoped to push domestic cement sales by 5-6 percent (y/y) to 65 million tons and overseas sales by 75 percent (y/y) to 2.85 million tons in full-year 2017.
Indonesian Cement Sales 2008-2016:
Source: Indonesian Cement Association (ASI)