Cement consumption in Indonesia in March 2018 was particularly supported by cement sales on Sumatra and Kalimantan. Sales grew by 9 percent (y/y) and 7 percent (y/y), respectively, on these islands.

Widodo Santoso, Chairman of ASI, is pleased seeing the Q1-2018 cement sales figure. Moreover, cement and clinker exports surged nearly 80 percent (y/y) to 701,630 tons in the first quarter of 2018. Stakeholders in Indonesia's cement industry have high hopes for exports as domestic cement demand is too small to lift the utilization rate of the nation's installed cement production capacity to 100 percent.

In the years 2011 and 2012 cement demand in Indonesia soared due to the property boom. As a result new investors arrived to set up cement manufacturing facilities, while existing cement companies invested in production capacity expansion. Not only were Indonesia's cement sales soaring in 2011-2012, but there was also plenty of room for long-term growth as Indonesia's per capita cement consumption is low, while many new property and infrastructure projects need to be built in the decades ahead. After 2012, however, domestic cement demand suddenly dropped amid the country's stalling property market (tighter monetary policy was a key factor).

In 2017 Indonesia's cement sales growth rebounded, accelerating by 7.6 percent (y/y) to 66.4 million tons. The 6.6 percent (y/y) growth pace in Q1-2018 means that cement sales growth eased slightly. However, considering government-led infrastructure development will remain strong in Indonesia in 2018 and 2019, sales may accelerate in the remainder of the year. Santoso added that progress on the government's one million houses program would also lift cement sales significantly. Part of this program is financed through the central government's state budget (through the village funds).

Lastly, Santoso hopes that the government will further curb imports of cement. Not only Indonesia has to cope with a cement oversupply situation, but also several neighboring countries are coping with a supply glut, hence they have been eager to boost exports by offering competitive prices on the international market.

Cement Sales & Exports in Indonesia:

  1st Quarter
1st Quarter
Domestic Cement Sales 14,754,727 15,721,861  +6.6%
Cement Exports   390,728   701,630 +79.6%

Sources: Bisnis Indonesia & Semen Indonesia

Indonesian Cement Sales 2008-2017:

Year Cement Sales
2017    66.4 million  +7.6%
2016     62 million  +1.6%
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      -

Source: Indonesian Cement Association (ASI)