Indonesia’s domestic cement sales are expected to be flat this year after weak demand in the first quarter, a director of the country’s second largest producer said on Thursday. Indonesia’s cement consumption fell by 3.3 per cent in the first quarter of 2006 compared to the same period a year before due to weak economic growth, and sales dipped by 0.3 per cent year-on-year last month.

"Production up until March was down by (nearly) four per cent and up through April it improved slightly as it fell to only three per cent, so I think for this year (sales) volume would be flat," Christian Kartawijaya told reporters. Earlier, he predicted domestic sales volume would increase by three to four per cent this year.  Indonesians consumed 31.51Mt of cement last year, up 4.9 per cent from 2004.

Higher interest rates, which climbed to a more than three year high following the government’s decision to sharply hike domestic prices last year, have slowed down the economy. Indonesia’s economy grew by only 4.59 per cent last quarter, its slowest pace in nearly two years time.

Kartawijaya also said the company expected its annual capacity to rise by 600,000t to 16.2Mt next year following some refurbishment of equipment. Despite being the number two player in the industry in terms of total production capacity, Indocement, controlled by HeidelbergCement Group , is the largest integrated cement maker in the fourth most populous nation.