Indonesian sales recover from seasonal slowdown

Indonesian sales recover from seasonal slowdown
Published: 04 November 2011

Indonesian cement sales recovered from a seasonal downturn in August and stood at 4.19Mt in September.

Slower activity during and right after Ramadan led to a dip in cement sales, which fell by 2.4 percent in August. However, September sales rebounded by 45.4 per cent year-on-year due to the increasing property and infrastructure building.

Given the current stable macroeconomic conditions, analysts and market observers believe that the present cement sales ceiling of 45Mt can be surpassed within this year.

Although there are worries about the indirect impacts of global financial uncertainty, strong fundamentals in the domestic economy suggest that the cement industry will be able to withstand these external shocks.

With an economic growth rate of 6.5 per cent and inflation at a manageable 4.6 per cent as of September, cement producers are confident that cement demand will remain high. Furthermore, Indonesia’s infrastructure and property projects are predicted to grow continuously in coming quarters due to a stable benchmark interest rate coupled with government spending on infrastructure projects. Considering all these, the cement association revised its sales target upward from six to 10 per cent.

In the first six months of 2011, cement production has reached 20.5Mt, representing a 9.1 per cent YoY increase. These figures suggest that there is room for expansion in Indonesia’s cement production to cater to the growing domestic demand. On the other hand, cement exports are expected to decline this year in order to meet surging demand in the domestic market.