Cement sales in Indonesia amounted to 65.501Mt in 2023. This is an increase of 3.4 per cent YoY compared to the 63.346Mt reported in 2022. Regional sales were a mixed bag, with over a third recording sale contractions.

Java, the country’s largest market, saw sales rise a modest 0.3 per cent YoY to 33.56Mt, while sales in the capital Jakarta rose 5.5 per cent YoY to 2.714Mt. Sales volumes were largest in Jabar, coming in at 10.695Mt, though this was down 1.3 per cent YoY from 2022. Sales also contracted in Jateng, falling 2.5 per cent YoY to 7.166Mt.

In Sumatera, sales amounted to 14.299Mt, up 5.7 per cent YoY in 2023. Sales in Kepulauan Riau jumped 21.4 per cent YoY to 945,332t. Double-digit growth was also reported in Sumut (13.7 per cent YoY to 3.195Mt) and Jambi (12.5 per cent YoY to 1.078Mt). By contrast, sales shrank 1.7 per cent YoY to 2.115Mt in Sumsel.

Sulawesi sales fell 3.5 per cent YoY to 6.199Mt, dragged down by a 6.5 per cent YoY decline to 1.889Mt in Sulteng. Sulsel reported increase of 4.5 per cent YoY to 2.313Mt.

Kalimantan recorded the fastest volume growth in 2023 with a 22 per cent YoY expansion to 5.183Mt, driven by 55.1 per cent growth in sales to 2.151Mt in Kaltim. Volumes also rose a notable 64.6 per cent YoY to 314,818t in Kaltara.

Cement sales in Nusa Tenggara amounted to 3.954Mt, a 13.1 per cent YoY increase, with a 22.7 per cent YoY expansion to 1.514Mt in Bali. Sales in east Indonesia rose 5.8 per cent YoY to 2.306Mt.

Exports
For 2023 cement exports shrank 6.1 per cent YoY to 1.294Mt, from 1.378Mt in 2022. Malaysia was the key cement export market, accounting for 24 per cent of exports. Followed by East Timor (23 per cent) and Mauritius (21 per cent).

Contrastingly, clinker exports saw a robust 25.1 per cent increase to 9.517Mt in 2023 from 7.604Mt a year earlier. Bangladesh was the key clinker export market in 2023, accounting for 64 per cent of clinker exports, followed by Australia (19 per cent) and then Taiwan (eight per cent).

Production
Cement production in Indonesia rose 3.3 per cent to 66.924Mt, from 64.79Mt in 2022. Clinker production advanced by 6.9 per cent YoY to 58.709Mt, up from 54.921Mt previously.

Outlook
Indonesia’s young population, expanding middle classes and ongoing urbanisation will continue to drive domestic cement sales in 2024. The economy is forecast to grow by around 4.9 per cent YoY, roughly in line with the five per cent recorded in 2023. Meanwhile inflationary pressures are normalising after the pandemic bounce-back and will come within the Bank Indonesia target range this year. This suggests the recovery seen in the self-build sector in the second half of 2023 will continue. Bagged cement sales account for 79 per cent of total domestic sales. Continued government support through the National Affordable Housing Program will further bolster demand.

Meanwhile, the ongoing development of Indonesia’s new capital, Nusantara, due to be inaugurated in August 2024, will underpin demand for cement in Kalimantan for some time to come. The first phase of the project, located on the east coast of Borneo island, has focussed on the creation of basic infrastructure and construction of administrative buildings. The second phase of the project due to run from 2025 to 2029 will focus on the construction of business and industrial districts, by the end of which 1.2m people expected to have relocated. Nusantara is expected to be finalised by 2040 and have a population of between 1.7m-1.9m.

Indonesian manufacturers and construction are increasingly optimistic. The non-metal mineral products industry sub-measure of the Prompt Manufacturing Index-Bank Indonesia (PMI-BI) jumped to 55.42 in the second quarter of 2024 up from 50.36 in the first three months of the year.  Meanwhile, improved access to credit and supply of materials and the reduced price of materials lifted construction in the final quarter of 2023, with the value of completed construction growing 4.8 per cent QoQ, according to data from BPS-Statistics Indonesia.  

Nevertheless, overcapacity remains a problem in the cement sector.  Total capacity was 138.95Mta in 2023, according to The Global Cement Report,15^th Edition, giving a capacity utilisation rate of just 48.2 per cent. Producers will continue to look towards export markets to address oversupply issues. Limestone-poor Bangladesh will remain a key market for clinker and producers may look to expand in markets such as the US while hoping for a quick recovery in the Chinese property market.

Published under Cement News