Indonesia: July cement demand up slightly, stronger growth anticipated

According to figures released by the Indonesian Cement Association (ASI), cement demand in July was up slightly YoY, despite falling by 29 per cent compared to June, Indonesian Investments reports.

Taken as a whole, the first seven months of 2016 have seen consumption rise by four per cent above the same period in 2015. However, demand remains below that recorded in 2014.

The industry’s failure to regain its previous peak has been partly attributed to the government’s slow pace of spending. On 4 August President Widodo noted that regional banks were holding IDR214tn (US$16.2bn) in undisbursed funds, telling local government leaders to “immediately spend it”.

Analysts expect cement consumption to rise in the second half of the year as regional leaders respond to President Widodo’s call and efforts to boost the property sector pay off.

In a recent research report, Citigroup analyst Felicia Asrinanda Barus added: "We think property demand will also be supported by continued lower mortgage rates, lower transaction costs for property purchases, and implementation of looser disbursement policies for second and further mortgages in the second half of 2016”.