Cement Sales Stagnant in 2016 Due to Delays in Infrastructure Projects

Domestic cement sales fell below target last year due to delays in some infrastructure projects. (Antara Photo/Jojon)

By : Eva Fitriani | on 4:06 PM January 12, 2017
Category : Business, Corporate News

Jakarta. Domestic cement sales fell below target last year due to delays in some infrastructure projects, cement producer lobby group Indonesian Cement Association (ASI) claimed.

The country used up 62 million metric tons of building material in 2016, the same as in 2015, ASI data showed. The lobby group initially targeted 65 million metric tons in cement sales domestically.

"Cement consumption was not as we predicted," ASI Chairman Widodo Santoso said on Wednesday (11/01).

Delayed infrastructure projects include highway constructions in East Kalimantan, Manado-Bitung and Medan-Kuala Namu. Disruptions to the projects mostly arose from land disputes or delays in financing, Widodo said.

Cement sales in Java contracted by 2 percent to 33.7 million metric tons. In Kalimantan, it dropped 12 percent to 4.1 million metric tons.

Sumatra, Sulawesi, Bali and Nusa Tenggara and Maluku and Papua, on the other hand, saw increase in sales, due to "road, dam, power plant and smelter projects in the region."

Domestic cement sales — along with motorcycle and car sales — are the lead indicators of economic growth in Indonesia, half of which depends on household demand.

Indonesia is the largest cement market in Asia Pacific last year, followed by Vietnam (55.7 million metric tons), South Korea (49.6 million metric tons), Japan (43 million metric tons), Thailand (29 million metric tons) and Melanesia (23.3 million metric tons) in 2015.

The country's cement industry has an installed capacity of about 100 million metric tons in 2017, also the largest in the region.

Widodo said ASI members want the government to stop issuing permits for new cement plants, at least in the short term, as the industry is now facing a production overcapacity of around 40 percent.

Even bigger capacity could lead to loss-inducing price wars among producers that may edge out some manufacturers.

 

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