Semen Indonesia - June 2018

Semen Indonesia is hoping to boost sales across the country by using an e-commerce platform. The move comes as the company announced a 4.5 per cent contraction in domestic sales in the opening quarter of 2018, falling from 2.38Mt in 1Q17 to 2.27Mt. Intense competition from new arrivals has forced established producers such as Semen Indonesia to lower their prices. 

It’s not only prices that have been affected by the new arrivals. The gap between cement production and demand in Indonesia also remains a concern. Although utilisation rates have picked up, increasing from 61.8 per cent in 2017 to 62.7 per cent in 1Q18, a large chunk of capacity remains idle. The past five years have not only seen existing players expand their capacity, newcomers have also established numerous new plants as Indonesia enjoyed a construction boom, particularly in the property sector. However, that boom has now ended leaving in its wake significant overcapacity. In a report by Indonesia Investments, according to Romauli Panggabean, analyst at Bank Mandiri, Indonesia’s cement production capacity is expected to hit 120Mta by 2021 and will continue to exceed demand until at least 2031.