Indonesia’s cement producers look for new business elsewhere

Though Indonesia is still one of the better performing cement markets, the rate of growth has slowed. In July, cement exports surged as producers attempted to offset slowing domestic demand, which some believe to have been caused by increased fuel prices.

“Sales growth is indeed slowing compared to last year,” Semen Indonesia corporate secretary Agung Wiharto told local press, adding that the majority of Indonesia’s cement sales are retail packages that may be impacted by higher fuel costs. The government raised the price of subsidised fuel in June as it attempted to curb fuel imports and contain the budget deficit. Inflation has also risen, resulting in a slowdown in investments.

Domestic production levels have been rising steadily, adding 4 million t in the last 7 months and expected to reach 65.8 million t by the end of the year according to Indonesian Cement Association (ASI) figures. In all, cement sales grew 7% to 32.9 million t in January – July 2013. ASI anticipates an 8% growth rate for the full year, amounting to sales of 60 million t.