Indonesia: sluggish local demand in February as export conditions to China deteriorate

Indonesia: sluggish local demand in February as export conditions to China deteriorate
20 March 2020

The Indonesian Cement Association (ASI) noted the rate of YoY decline in national cement consumption has slowed to -0.1 per cent in February from January's position, which was -7.5 per cent. In addition, export volumes, which had surged 40 per cent in January, dropped by 27.9 per cent to 440,000t in February.

"It is unfortunate that our cement and clinker exports, which we hope can improve the performance of the cement industry, are constrained by the presence of a corona [virus], resulting in the dramatic fall of cement and clinker exports to China," ASI Chairman, Widodo Santoso, explained to Bisnis Indonesia on Monday 16 March 2020.

According to Mr Widodo, the outbreak of the coronavirus has forced cement-producing countries in southeast Asia to shift their sales to the local cement market as the coronavirus impacts various export markets, including Bangladesh, Australia, the Philippines and certain countries in Africa. The ASI was targeting cement production for exports to grow 17.2 per cent to 7.5Mt in 2020, compared with last year's total of 6.4Mt.

In terms of local consumption in February, markets in decline were Java (-2.8 per cent), and Bali and Nusa Tenggara (-10 per cent). The largest consumption growth was recorded in the Maluku and Papua regions at 44 per cent, reaching 282,000t in February. Mr Widodo hopes that infrastructure projects outside of Java will start immediately so that cement consumption does not decline any further.

Meanwhile, cement consumption on the island of Sulawesi grew by 4.4 per cent to 426,000t in February. Mr Widodo said the increase in consumption was caused by mining projects that are still ongoing. "The condition of the cement market at the beginning of the year is still stagnant, not yet encouraging," he said.

Market conditions in January and February had already deteriorated due to the higher-than-normal rainfall and delays to government development projects. The onset of the coronavirus will inevitably undermine consumption volumes from March onwards.

Indonesia’s president, Joko Widodo, has not yet declared a nationwide state of emergency due to the coronavirus outbreak. However, the head of Indonesia’s disaster mitigation agency (BNPB), Doni Monardo, has issued a circular extending the state of "certain emergencies" until 29 May.

Published under Cement News