One of the key issues in Indonesia's cement sector - a new phenomenon that started to emerge last year - is that the nation's installed production capacity has surged to nearly 100 million tons per year due to the arrival of a handful of new (foreign) cement players in Indonesia. Meanwhile, domestic cement demand is expected to reach 65 million tons only in full-year 2016, implying a potential supply glut that puts downward pressure on cement prices, hence undermining the profitability of Indonesian cement manufacturers. It has been suggested earlier that Indonesian cements producers should increase focus on export markets.

Read more: Cement Industry of Indonesia

Cement sales in June may fall rather sharply on a month-to-month basis as the Ramadan month (the holy Islamic fasting month), which covers most of the month June up to the first week of July (and followed by the Idul Fitri celebrations), usually leads to reduced work activities. Property and infrastructure projects may therefore come to a near standstill during the Ramadan and a full standstill during Idul Fitri (4-10 July).

Indonesia's Largest Cement Consuming Islands in May 2016:

Island Cement Sales
Sulawesi      414,00 +16.0%
Kalimantan     337,000 +10.8%
Sumatra    1.05 million  +4.9%
Java    2.88 million  +3.5%

¹ ASI forecast
Source: Indonesian Cement Association (ASI)

Indonesian Cement Sales 2008-2016:

Year Cement Sales
2016¹     65 million  +3.3%
2015     61 million  +1.8%
2014     60 million  +3.3%
2013     58 million  +5.6%
2012     55 million +14.6%
2011     48 million +20.0%
2010     40 million  +4.2%
2009    38.4 million  +1.1%
2008     38 million      -

¹ ASI forecast
Source: Indonesian Cement Association (ASI)