Update COVID-19 in Indonesia: 1,542,516 confirmed infections, 41,977 deaths (6 April 2021)
14 April 2021 (closed)
USD/IDR (14,146) -6.00 -0.04%
EUR/IDR (17,335) +57.05 +0.33%
Jakarta Composite Index (6,050.28) +122.84 +2.07%
Domestic cement sales in Indonesia fell 2.9 percent year-on-year (y/y) to 4.5 million tons in January 2015. A fall in cement consumption was detected in almost all regions of Indonesia, possible related to heavy rains that have plagued several areas in January and led to a slowdown in construction and infrastructure projects in Southeast Asia’s largest economy. Widodo Santoso, Head of the Indonesian Cement Association (ASI), said that the largest declines in cement sales in the first month of 2015 were recorded in Kalimantan and Sumatra.
In Kalimantan cement sales dropped 12.9 percent (y/y) to 327,000 tons in January 2015, while in Sumatra the figure fell 9.6 percent (y/y) to 924,000 tons from the same month last year. Sales on the island of Java, the largest cement consumer among Indonesian islands, remained stagnant at 2.55 million tons. However, there was a large increase recorded in cement sales in the Moluccas and Papua in the eastern part of Indonesia. In this area, cement sales rose 43.5 percent (y/y) to 125,000 tons.
Santoso said that he expects no recovery in cement sales in February as several Indonesian regions are still plagued by torrential rains. Provided that the government of Indonesia can accelerate planned infrastructure projects then cement sales may rebound in March 2015.
Meanwhile, Indonesian cement producers are eager to expand production capacity. Government-controlled Semen Indonesia, the country’s largest cement producer, set aside IDR 6 trillion (USD $480 million) for capital expenditure (capex) in 2015 to finance expansion of its cement plant in Rembang (Central Java) and Padang (West Sumatra). This should increase the company’s cement production capacity to 31 million tons in 2015. Another state-controlled cement producer (yet much smaller), Semen Baturaja, also plans to raise production capacity. By 2017, cement production capacity of the company should stand at an annual 3.85 million tons, partly supported by a new cement plant.
A few days ago it was reported that the Indonesian government would like to curtail investment opportunities in Indonesia’s cement industry in a move to safeguard a healthy business climate in this industry. An Industry Ministry official said that the country’s cement production capacity (currently at 77 million tons) is more than enough to meet domestic cement demand. New investment, which will add cement production capacity, will then lead to low profit margins as cement prices tumble amid an oversupply.
Based on data from the ASI, Indonesian cement sales stood at 60 million tons in 2014, up 3.3 percent (y/y) from the preceding year but below the growth target that was set by ASI. Santoso said that Indonesia’s political year (referring to the legislative and presidential elections that were held in 2014) and low commodity prices were the main reasons why growth of cement sales slowed.
In mid-January 2015, Indonesian President Joko Widodo instructed state-owned cement producers to lower their cement prices by around IDR 3,000 per sack in an attempt to boost cement sales by enabling the wider public to buy cement (as purchasing power strengthens).
Indonesian Cement Sales 2008-2014:
|Year|| Cement Sales
|| YoY Growth
Source: Indonesian Cement Association (ASI)