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4 December 2020 (closed)
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Over the past two years the cement oversupply in Indonesia has become increasingly excessive. Indonesia's total annual installed cement production capacity has now risen to 106.3 million tons, while domestic demand may not exceed 65 million tons in 2017. Moreover, production capacity will rise further this year as Semen Indonesia will open two new plants later this year.
Widodo Santoso, Chairman of the Indonesian Cement Association (ASI), therefore urges the government to impose a moratorium on the construction of new cement plants in Indonesia. To protect the interests of existing cement manufacturers, ASI wants to see a significantly rising utilization rate of domestic cement production capacity. Currently, Indonesian cement producers only use an average 70 percent of their total production capacity.
Between 2010 and 2013 domestic cement demand in Indonesia rose steeply amid the nation's property boom (this boom cooled in 2014) and therefore existing domestic players decided to invest heavily in business expansion (boosting their production capacity), while new foreign players entered, lured by the promising perspectives.
This led to surging cement production capacity in Indonesia. However, growth of cement demand stagnated starting from 2013 as the property sector cooled (while overall economic growth of Indonesia was also sliding). ASI estimates that - with cement demand growing an average of 5 percent per year in Indonesia - it will require ten years for cement sales to catch up with the nation's total installed production capacity.
Read more: Overview of Indonesia's Cement Industry
A side-effect of the cement oversupply is that cement prices are declining by about 1 percent per year. For example, in 2015 a bag of cement cost IDR 70,000 (approx. USD $5.25) on Java island. Currently, the price has fallen to IDR 55,000 per bag on the same island.
In the January-July 2017 period Indonesian cement sales rose 4.4 percent year-on-year (y/y) to 34.6 million tons.
Installed Production Capacity Indonesian Cement Producers:
(in million metric tons)
|Semen Indonesia Group||35.5|
|Indocement Tunggal Prakarsa||24.9|
|Lafarge Holcim Indonesia||14.5|
|Semen Merah Putih||7.5|
|Semen Anhui Conch||4.5|
|Semen Pan Asia||1.9|
|Siam Cement Group||1.8|
|Semen Jui Shin||1.5|
|Semen Serang (Haohan)||1.2|
Indonesian Cement Sales 2008-2016:
Source: Indonesian Cement Association (ASI)