Gresik sees market share concerns, Indonesia

PT Semen Gresik, Indonesia’s largest cement maker, expects its market share to fall below 40 per cent in the next two years, from the current 45 per cent, unless the company raises its production capacity, company president Satriyo said. "If we do not increase capacity, in the next two years our market share will drop below 40 per cent," Satriyo told the Lower House of Parliament (DPR)’s Commission VI.

 He said cement demand is expected to grow by eight pct this year but Semen Gresik’s market share is likely to fall this year and drop further next year as the company cannot match rising demand with enough supply due to output constraints. . Satriyo also predicted that Indonesia may suffer cement shortage in 2009 partly because aging cement plants would be less efficient amid higher fuel prices.  

 "The shortage could even come earlier-than-expected if the government infrastructure projects currently being prepared for tender begin construction." Cement companies are currently operating at near full capacity. Given the rising demand, producers may have to cut exports, Satriyo said.

 "Maybe in 2006, there will be no exports," he said. He also told the legislators that if the government sells Semen Gresik’s cement plants PT Semen Tuban I, II and III to settle a dispute with Mexico’s Cemex SA, foreign investors will end up controlling about 80 per cent of Indonesia’s cement market.