Indonesian cement sales to improve on state-funded projects

Indonesian cement sales to improve on state-funded projects
Published: 21 September 2009

Cement sales in Indonesia are predicted to improve in the second half of the year since demand is set to increase as the government’s infrastructure projects, get under way according to the Industry Ministry.

"Cement sales began to pick up in August and this is expected to continue until the end of the year due to infrastructure maintenance projects that have been started since the middle of this year," the Ministry’s director general for agriculture-based and chemistry industries Benny Wahyudi said earlier this week.

"I assume that this year’s cement sales can grow better than -4 per cent last year’s figure; it may even grow by one per cent."

He said many of government infrastructure projects that were supposedly starting around March had been late and began construction mid-year instead.

"Cement sales can still grow another inch in the second semester," said Benny in an interview.

The ministry’s prediction is largely shared by the industry players. The country’s second largest cement producer, publicly listed PT Indocement Tunggal Prakarsa, has revised upward national cement sales figures this year from an initial -7 per cent to between -5 per cent and -4 per cent. Although these figures are still negative they are improving.

Indocement finance director Christian Kartawijaya said cement sales slumped steeply in the second half of last year due to the global economic downturn after earlier robust sales, but bounced back at the start of the second half of this year.

"I forecast that the trend for *domestic* cement sales will be positive between August and December. Hence, the market will total 36Mt this year, compared to 38Mt last year."

He said his company had to delay its project to build a 1.5Mt cement mill in its Cirebon, West Java plant site from June until the year’s end, pending anticipated improvements in the market.

"*With the new mill in Cirebon* our total production capacity will reach 18.6Mta by the end of this year, up from 17.1Mt currently," said Christian.

According to data from the Indonesian Cement Association (ASI), domestic cement sales fell by 5.5 per cent to 21.08Mt in the first seven months of this year down from 22.3Mt in the corresponding period last year.