Cement producers expecting more growth in 2011

Cement producers expecting more growth in 2011
Published: 03 January 2011

Cement consumption in Indonesia, Southeast Asia’s largest economy is forecast to increase six per cent to 42.4Mt next year, an industry association said. Urip Trimuryono, chairman of the Indonesian Cement Association (ASI), said strong demand in the property sector and government spending on infrastructure will continue next year, driving sales of the building material.

“This year, we’re expecting cement consumption to grow six percent to 40Mt, and another six per cent growth next year,” he said.

“The cement industry rebounded from a very sluggish growth last year — just one per cent because of the global financial crisis. But Indonesia has proven be more resilient this year.” Urip said the property sector was the main driver behind the industry’s growth, with record-low interest rates and easy to obtain housing loans raising developers’ prospects.

“Analysts originally forecast a sluggish property sector, but it wasn’t. Property remained the biggest cement consumer,” he said, adding that cement consumption in this year through November hit 36.8Mt.

Urip said the private sector accounted for 60 per cent of total cement consumption, with government spending still lagging as many of its infrastructure projects were delayed by land acquisition problems.

“Challenges in the sector this year include unpredictable weather, which has caused delays in distribution and slowed production a little bit. The electricity tariff hike did not have a significant effect as the players anticipated this. They knew it was going to increase sooner or later,” Urip said.

The government’s plan to boost infrastructure by building power plants, bridges, seaports and airports should continue to boost cement sales next year, though Urip said more challenges remain. “To achieve our target we need certainties in fuel supply, because the sector relies heavily on energy. We’re hoping that the government’s fast-track [energy] plan can be realized next year,” he said.