Indonesian cement sales fall 9% in November

The Indonesian cement market is seeing a steep fall in cement sales as the year draw to a close. Cement sales volume during January-November 2016 was almost stagnant with November sales down nine per cent when compared with the same period last year to 5.74Mt, according to the Indonesian Cement Association (ASI).

Cement sales volumes during the 11M16 period increased only 0.3 per cent YoY to 56.5Mt. In 2015 sales expanded by 1.8 per cent driven by government spending at the end of the year.

Indonesian Cement Association Chairman, Widodo Santoso, said local governments in Kalimantan and Sulawesi had decided to postpone infrastructure projects due to budget reductions.

There is also a drop in cement demand due to less property projects in major cities, especially in Java.
"The last condition the cement industry's situation has not been encouraging. The decline in consumption of up to 570,000t. This is incredible," said Mr Santoso.

A further reason for the projected sales slowdown is the implementation of the construction of projects in the power, industrial minerals processing and refining and petrochemical industries does not match expectations.

"It's beyond our predictions. The programme was that infrastructure, power plants, processing plants etc would rise at least four to five per cent. It turned out that the increase below one per cent," said Mr Santoso.

He called upon the government to restrict the import of cement and delay the approval of new cement plant construction licences as the industry currently has an excess capacity of 30-40 per cent. Moreover, the government could also subsidise electricity or energy to reduce production cost pressures and improve the domestic sector's competitiveness in the export market, Mr Santoso added.