Indonesian cement exports expected to grow 50%

Indonesia's cement and clinker exports are forecast to reach 1.5Mt in 2016, a 50 per cent increase when compared with the export volume of the previous year.

In the seven months to July, exports had already noted a 63 per cent YoY increase. Indonesia exported 833,000t of cement and clinker in January-July, according to the Indonesia Cement Association (ASI). Around 509,000t of this was clinker while the remainder consisted of bulk cement.

The news is particularly welcome for the country's cement producers who have seen oversupply in the domestic market steadily rise. Six new cement plants were commissioned in the country this year alone, adding some 14Mta of production capacity with national cement capacity now reaching 92Mta. However, the domestic cement market is expected to require no more than 65Mt this year, leaving an oversupply of 27Mt. ASI Chairman, Widodo Santoso, supports the country's cement producers' request to the government to issue a moratorium on new permits for the construction of new cement works. The moratorium would require to be in place until at least 2019 as existing producers fear further falls in profit due to structural oversupply and expect to have difficulty in paying off loans from banks that were obtained to build the cement plants.

The glut is exacerbated by tough export competition in the region. Vietnam, Thailand, Japan, South Korea and China are all plagued by oversupply issues and are aiming to increase their export volumes.