Indonesia sales growth slows in first six months

Indonesia sales growth slows in first six months
14 July 2014

Indonesian cement sales growth has slowed in the first six months of the year, leading to concerns that the country may miss its full year target.

For the six months to the end of June 2014, domestic sales reached 28.9Mt, up 3.9 per cent YoY but well below the full-year growth target of six per cent.

According to data from the Indonesian Cement Association (ASI), cement demand on the island of Sulawesi rose at the highest YoY rate of 5.7 per cent YoY to 2.1Mt. Consumption on Java, Indonesia’s most populous island, increased 5.6 per cent YoY to 16.3Mt. Meanwhile, demand in Sumatra – another key domestic cement consumption hub – rose by 1.4 per cent to 6.1Mt.

The first-half slowdown was partly attributed to legislative and presidential elections which have resulted in the postponement of many construction projects. Moreover, Bank Indonesia has imposed new measures that are limiting property ownership including stricter loan-to-value ratios for mortgages (announced in mid-2013) and a gradual increase in the benchmark interest rate to 7.50 per cent in late-2013.

In terms of the outlook for cement demand for the remainder of the year, Widodo Santoso, chairman of the ASI, said he hopes to see an improved performance of around 6-8 per cent. Growth at this rate will enable the country to record at least a five percentage point increase through 2014.

Published under Cement News