Property boosts Indonesian cement demand

Fuelled by rising housing demand and subsequent property development, Indonesia saw cement sales increase 12% through the first seven months of the year, according to the Indonesian Cement Association (ASI).

Cement consumption rose to 30.86Mt in the January-July period, from 27.54Mt in the same period
last year, said Widodo Santoso, ASI chairman.

“Housing loans have spurred the development of housing and real estate development in Indonesia,” Widodo said last week.

Industry analyst Urip Timuryono said cement consumption in Indonesia will continue to increase this year, thanks in part to various government projects including construction or expansion of toll roads, bridges and airports, and other related infrastructure development.

Urip forecast cement consumption to increase to 56.2Mt in 2012 from last year’s 48Mt.

“The rising purchasing power of many Indonesians, coupled with massive infrastructure projects, has pushed up consumption of the commodity,” said Urip, who is a former chairman of ASI and
a former executive at Semen Gresik, the country’s largest cement maker.

Data from the association showed that Java remained the biggest consumer of cement, accounting for almost 17Mt. Sumatra came in a distant second at 6.81Mt of cement; Kalimantan used 2.3Mt; Sulawesi recorded 2.2Mt; the islands of Bali and Nusa Tenggara were at 1.75Mt; and Maluku and Papua consumed just 0.7Mt. The remaining output was sold overseas.

The state-owned Semen Gresik Group dominates market share, alone selling 12.3Mt of cement in the first seven months of this year. The group includes Semen Gresik, Semen Padang and Semen Tonasa.

Other major cement makers in Indonesia are Indocement Tunggal Prakarsa and Holcim Indonesia.