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Indonesia's May cement sales up 6.2%

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World Cement,

Indonesia's cement sales rose 6.2% (y/y) to 5.1 million t in May 2016, the highest monthly figure so far in 2016. As the property sector of Indonesia remains subdued amid sluggish demand and development, growth in cement sales is regarded to be the result of infrastructure development. Data from the Indonesian Cement Association (ASI) show that Indonesia's cement sales total 24.1 million t in the first five months of 2016, up 3.9% (y/y) from sales in the same period one year earlier.

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 t 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.

Cement sales in June may fall rather sharply on a month-to-month basis as the Ramadan month, which covers most of the month June up to the first week of, 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).

Edited from source by Joseph Green. Source: Indonesia Investments

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