Indonesia: domestic cement sales weaken in November

The first 11 months of 2016 Indonesian cement sales reached a total of 56.5Mt, up 2.8 per cent YoY from domestic cement sales in the same period one year earlier. However, domestic cement sales weakened 5.4 per cent MoM to 5.7Mt in November 2016, according to Indonesian Investments.

Meanwhile, in the first 11 months of 2016 Indonesia exported 1.5Mt of cement, up a massive 52.2 per cent YoY.

Semen Indonesia and Holcim Indonesia  saw their market share fall more than six per cent in November, while Semen Merah Putih and Semen Baturaja gained market share.

In 2016 the nation's total annual cement production capacity is estimated to touch nearly 100Mt and is expected to rise to 104Mt by 2018.

However, the combination of rising production capacity and sluggishly-growing cement sales implies that the utilisation rate has fallen, states Indonesian Investments. In 2016 it is estimated that only 65 per cent of the nation's total installed cement production capacity was used, down significantly from a utilisation rate of 76.9 per cent in the preceding year.

In 2017 this utilisation rate is expected to fall slightly before rising in 2018 on the back of a recovering property sector and the continuation of infrastructure development, claims Indonesian Investments.

Rising production capacity and muted cement demand also imply that the cement price will remain under downward pressure in the foreseeable future, limiting corporate earnings of the country's cement producers. Energy-related costs are estimated to account for about 38 per cent of total production costs in the cement sector.