Indonesian cement industry down 2% in 1H19

The Indonesian Cement Association has reported that domestic cement sales volumes in the 1H19 dropped 2.2 per cent YoY to 29.4Mt due to weaker demand from Java (-2.8 per cent YoY) and Sumatra (-6.3 per cent YoY). This is likely to have been the result of a weak property sector, which accounted for around 70 per cent of the country's cement demand, coupled with delays in construction due to the presidential elections and the long Al-Fitr holidays.

Fitch Ratings has added that the industry will require at least five years of consistent five per cent YoY growth to reach a utilisation rate of 80 per cent, while it may remain between 64-66 per cent this year with domestic growth of 2-5 per cent. However, transaction volumes may pick up pace after the elections, as President Joko Widodo has pledged to keep up the infrastructure projects.