Due to a lower demand from the domestic housing industry, Indonesian cement sales for the month of September fell 3.3 per cent to 5.64Mt compared to September of 2015, according to the Indonesian Cement Association (ASI).
Cement sales fell in Java, Sumatra and Kalimantan, while eastern parts of the country including Sulawesi, Maluku and Papua saw growth, reports Widodo Santoso, ASI chairman. Java sales amounted to 3.11Mt for the month, a drop of five per cent YoY, Sumatra saw a decline of 3.2 per cent to 1.22Mt and Kalimantan reported a four per cent fall to 0.39Mt. Bali and Nusa Tenggara also saw a three per cent drop to 0.31Mt.
Markets such as Sulawesi, Maluku and Papua all saw growth. Sulawesi improved 6.8 per cent YoY to 0.49Mt while sales in Maluku and Papua rose by 10 per cent to 0.13Mt.
For 9M16 cement sales reached 44.71Mt, a 2.95 per cent increase on the same period last year. Chairman Widodo Santoso predicted sales growth may reach between three and four per cent this year, but for producers this rate is not fast enough to justify recent investments. There are concerns that the drop in demand will lead to new plants being underused. Fitch Ratings estimates capacity utilisation to be in the range of 65–70 per cent, lower than the 85 per cent seen over the past three to five years.
"It is disturbing to the cement industry, since producers such as Semen Tiga Roda and Semen Jawa had already opened new production facilities in the first half of 2016. Semen Padang and Semen Indonesia in a few months will also open new plants," Widodo Santoso said.
He went on to say that with producers having already exceeded demand by more than 30 per cent, he and the association hope the government will address the issue with new policies.
