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14 April 2021 (closed)
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Cement exports from Indonesia have surged sharply in the first five months of 2016. Rising cement export is a good strategy to tackle the domestic oversupply of cement in Indonesia. Due to the influx of new cement producers as well as the expansion programs of existing cement producers in Southeast Asia's largest economy, the nation's cement production capacity has nearly reached 100 million tons per year, while domestic demand may only reach 65 million tons in 2016.
Widodo Santoso, Chairman of the Indonesian Cement Association (ASI), said the cement companies in Indonesia need to tap export markets as domestic cement demand has been on the decline over the past two years, while the nation's installed production capacity has grown sharply over the same period. According to ASI data, Indonesia's cement and clinker exports rose a whopping 136.3 percent (y/y) to 482,000 tons in the January-May 2016 period. The nation's existing cement producer are increasingly searching for export markets. Indonesia's largest cement producer Semen Indonesia is even planning to establish a new subsidiary that will be completely focused on cement exports.
Semen Indonesia also plans to acquire up to two foreign cement firms in order to boost revenue from overseas markets. The company may spent up to USD $100 million in 2016 to expand overseas. Agung Wiharto, Semen Indonesia's Corporate Secretary, said the company needs additional revenue sources as domestic sources are under pressure.
One of Semen Indonesia's existing subsidiaries, Semen Tonasa, started to export cement to the Philippines in June (it is expected to ship some 4,100 tons to the Philippines this month). The majority of its cement exports, however, is shipped to East Timor.
Another unit of Semen Indonesia - Semen Padang - started to focus on cement exports to the Middle East at the start of 2016. Meanwhile, Holcim Indonesia has been raising cement exports to Bangladesh and Sri Lanka.
Read more: Overview of Indonesia's Cement Industry
Although it is an encouraging sign that Indonesia's cement producers can tap new (export) markets, the export of cement also causes high logistics costs, while cement prices paid by foreign importers are not necessarily higher than domestic prices. As such, it remains more lucrative to sell to the domestic market.
Indonesian Cement Exports January-May Period:
Indonesian Cement Sales 2008-2016:
¹ ASI forecast
Source: Indonesian Cement Association (ASI)