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Indonesia’s cement market slower in 2012

World Cement,


Reports have shown that Indonesia’s 2012 cement sales rose at a slower pace than those of 2011. The country’s overall economic growth was lower than expected, and many infrastructure projects weren’t realised or followed through with.

Last year, according to information from the Indonesian Cement Association (ASI), cement sales grew by 14%, reaching 55 million t overall and improving on the previous year’s 48 million t. However, as the country’s economy expanded by 6.5% in 2011, cement sales grew by 18%, marking the fastest rate of expansion in the sector since the Asian financial crisis of 1997 – 98.

Although the government’s target was to meet 2011’s GDP growth again in 2012, it came up short, with growth of only 6.3%. The outlook for 2013 is better though, with Finance Ministry predictions a 6.6% growth in GDP this year.

The other factor that took its toll on the cement industry was government infrastructure spending, which reached only Rp140 trillion (US$14 billion) last year. This figure represents just 80% of the governments spending target for infrastructure.

Perhaps encouragingly, regions outside of Java did see rapid growth last year. Cement consumption in Maluku and Papua rose by a staggering 52%, meaning a total of 1.2 million t was consumed, up from the 790 889 t of 2011.

These two regions account for only 2.2% of the Indonesia’s current cement consumption, but it is expected that over the next three years, this will rise to 7%, due to several major projects that are just getting underway. Indeed, as part of the government’s MP3EI economic plan, the provinces of Papua, Maluku and Nusa Tenggara are to host ambitious projects, such as the US$3 billion petrochemical complex in Bintuni Bay, West Papua.

However, with java accounting for 55% of the domestic cement sales total in 2012, followed by Sumatra with 22%, it will take further project cultivation in these regions to really kick start growth overall.

Stronger domestic demand has allowed local producers to reduce sales overseas. ASI data showed cement exports slumped 82 percent last year, the biggest drop in six consecutive years of declines.

One must remember that, in spite of growth not being as high as it has previously been, 14% is still a respectable figure. The combined sales of the companies held by Semen Indonesia accounted for 41% of the market last year, outstripping the overall figure by posting a growth of 15% across Semen Gresik, Semen Padang and Semen Tonasa.

Written by Jack Davidson.

Read the article online at: https://www.worldcement.com/asia-pacific-rim/17012013/indonesia_cement_market_growth_838/


 

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