Indonesia consumption drops to lowest level
Indonesian cement consumption in September fell by 2.4% from September last year, or the sharpest decline in the past nine months.
In January-August 2007, the national cement consumption rose by 2.2% to 18% from the same period last year YoY. The decline of cement consumption in September was the first in 2007.
Data released by the Indonesian Cement Association (ASI) revealed the cement consumption in September only reached 3.11Mt, down by 78,000t from 3.188Mt in September 2006 or down by 9% from 3.415Mt in August 2007.
Chairperson of ASI Urip Timuryono informed the decline of cement consumption in September was triggered by the arrival the fasting month and preparation for the Idul Fitri holiday, which slowed down infrastructure development activities.
Consumption is estimated to continue declining this month as infrastructure development activities had to be put into a halt in the wake of two-week Idul Fitri holiday in October.
At the same time, the distribution of cement would be curbed as the government during the Idul Fitri holiday would prioritize to make transportation lines smoother for Idul Fitri travelers.
"It is why we predict the cement consumption in October will only reach 2.9Mt or 3Mt," Urip said.
However, he continued, compared to the cement consumption of 2.25Mt in October last year, the cement consumption in October 2007 would still increase by 28.8% as the cement consumers (consisting of the property and infrastructure sectors) had bought large volumes of cements from the end of August to the second week of September.
Urip criticized the government’s policy of establishing long Idul Fitri holiday had curbed the realization of private and public projects. "This certainly harms the cement industry and curbs the completion of the projects."
Therefore, he added, the government in the future needed to cut the holiday time to prevent larger losses.
"In addition, the Idul Fitri this year falls not long before the rainy season, the Idul Adha holiday, and the yearend holiday. Usually, projects cannot be completed on time during the rainy season. Therefore, a long holiday will only curb industrial activities.
However, he estimated the cement consumption in November would recover to over 3Mt as in that month consumers would stock cement to anticipate the yearend.
Judging from the monthly condition, he added, the cement producers were still optimistic to reach the targeted cement sales volume of 33Mt in 2007, up from 31.5Mt in 2005.
Published under Cement News
