Entering the second quarter of 2007, the national cement consumption in April fell drastically by 10.5% from 2.65Mt in March to 2.4Mt.
This is surprising as it once was estimated the domestic cement consumption would recover following the realization of some infrastructure projects by the government.
However, compared to the same month last year, the national cement consumption in April 2007 rose by 1.51% from 2.36Mt in April 2006.
In the meantime, from January through April 2007, the cement consumption increased by 7.1% compared to the same period last year from 9.3Mt to 9.9Mt. In the first quarter of 2007, the national cement consumption also rose by 8.95% from that in the first quarter of 2006.
Despite some improvements, the drop in cement consumption in April was the second lowest consumption in the first four months of 2007 after in February the cement consumption only reached 2.3Mt.
Chairperson of the Indonesian Cement Association (ASI) Urip Timuryono disclosed the delay in cement consumption growth was caused by the government’s slow realization of some infrastructure projects.
The decline, he continued, was beyond the expectation of cement producers. Therefore, he added, the central and regional governments were urged to accelerate the realization of infrastructure projects.
"The national cement consumption in April 2007 fell compared to that in March. It means that the growth has missed the prediction. It is probably because many government projects that have yet been realised," he analyzed yesterday.
The situation, he said, was similar with that in April 2006 when the national cement consumption declined from 2.5Mt in March 2006 to 2.36Mt. Data by ASI further showed that the national cement consumption in April 2005 also dropped from that in March 2005.
However, at the time, the drop in cement consumption was triggered by the declining purchasing power following the fuel price hikes in October 2005, which, in turn, also curbed the realization of some property and infrastructure projects.
According to him, it would take time for BI rate cut to bring positive effect to the people’s purchasing power in the property sector, which was one of the largest cement-consuming sectors.
Urip explained the decline in cement consumption in April had made the domestic cement sales in January-April 2007 only grow by 8.6%, down from 7.10% in January-March 2007 period.
"The cement consumption growth in the first quarter of 2007 is still good as the government has been able to quickly realize its spending budget carried over from 2006. However, the trend failed to happen in April," he said.
According to the data, the cement consumption in April 2007 only reached 2.4 million tons (temporary figures), or up slightly by 1.51% from 2.36 million tons in April 2006.
However, assured Urip, the declining trend might be temporary following the slow realization of government infrastructure projects.
"Cement producers are still monitoring the cement market movement in the next two months to predict the real trend of cement industry this year. Nevertheless, cement producers hope the cement consumption in May will be better," he inserted.
Separately, Director General of Agricultural and Chemical Industries at the Department of Industry Benny Wachjudi disclosed the government was still optimistic that the national cement market would grow by 10% per annum. Last year, the total domestic cement consumption plus cement export volume reached 35Mt.