Indonesian industry to face continued overcapacity challenge

Indonesian industry to face continued overcapacity challenge
26 November 2020

The COVID-19 pandemic has seen Indonesian cement sales drop throughout most of 2020 with October sales down 9.7 per cent YoY. Moreover, demand is predicted to fall 11 per cent YoY by the end of the year, according to PT Indocement Tunggal Prakarsa Tbk.

However, the industry is currently challenged by considerable overcapacity. In 2020 total domestic cement capacity is 116.4Mta with a plant utilisation of 54.6 per cent, supplying a domestic market of an estimated 63.6Mta.

Competition is expected to sharpen further next year as the country’s cement industry is seeing a continued build-up of capacity. Semen Hongshi and Semen Grobogan have entered the market with a 0.8Mta plant in East Java and a 1.2Mta works in Central Java, respectively. As a result total cement capacity in Indonesia is forecast to reach 120.5Mta with a similar capacity utilisation rate, supplying a 66.2Mt domestic market.

Published under Cement News