Indonesian sales seen reaching 16% in 1H12

Indonesian cement consumption is expected to rise by double-digits in the first half of this year, driven by a residential housing boom and the realisation of infrastructure projects.

Widodo Santoso, chairman of the Indonesian Cement Association (ASI), told reporters on the sidelines of the Cemtech Asia 2012 Conference & Exhibition in Jakarta, Indonesia that cement sales during January to June were estimated to reach 26Mt.

“As of May, demand had already risen by 16 per cent as infrastructure projects continue. A more favorable credit interest rate also encouraged people to build houses, which in turn fuelled the demand for cement,” he told the Jakarta Post.

Between January and May, domestic cement sales reached 21.4Mt up 16.4 per cent from the same period last year. The highest growth rate was seen in Kalimantan, where demand rose 28.9 per cent to 1.68Mta from a year earlier followed by Sulawesi and Nusa Tenggara, where sales increased 24 per cent to 1.62Mt, and by 16.2 per cent to 1.15Mt, respectively according to the association’s statistics.

This trend would likely continue with robust sales growth being seen on the islands beyond Java, despite the lower volume compared to Java, which traditionally accounted for up to 55 percent of the nation’s total cement sales, Widodo said.

Mr Panggah Susanto, Director General of Manufacturing Based Industry – Ministry of Industry, also highlighted during his keynote address at the Cemtech Conference that the government’s Masterplan for Acceleration and Expansion of Indonesia’s Economic Development (MP3EI) program will impact the shift of cement demand outside Java. Speaking of the current cement capacity expansions and initiatives now underway across Indonesia, he said: “For anticipation of increasing demand for cement and demand shift out of Java, contribution and strategies from the national cement manufacturers is required to ensure availability of cement in the entire country through the construction of cement packing plants, as well as an integrated cement plant, particularly in areas that have not has a cement factory," he stated.

"The Government will continue to support the implementation of these, through policies that encourage the flow of investment in cement industry, as well as by providing incentives for the construction of cement plants in certain areas, especially in eastern Indonesia,” Mr Susanto noted.