JAKARTA (TheInsiderStories) – The Indonesian Cement Association reported the national cement sales dropped more than 10 percent throughout 2020 from 70 million tones to 62.7 million tones. This was the lowest growth in a decade based on the official data.
Earlier, the organization was estimated the domestic cement sales could grow by 7 percent in 2020. In December, the domestic cement sales contracted by 6.0 percent compared to the previous month to 5.7 million tones and contracted by 12.1 percent on an annual basis.
The highest number of domestic cement sales in 2020 occurred in October, amounted to 6.2 million tones and the lowest sales occurred in May at 3.2 million tones. Cement exports also experienced a decline, contracted by 1.6 percent in a monthly basis to 670,000 in December 2020.
Compared to the previous year, the cement exports rose 142.8 percent. In 12 months of 2020, cement export grew 48.2 percent to 9.3 million tones. The export market only contributed 12.9 percent compared to the total domestic production.
In this year, the analysts estimating that domestic cement sales could grow up to 6 percent compared to 2020. The positive catalysts are expected from the infrastructure projects spending by the government in the 2021 State Budget worth of Rp414 trillion (US$29.36 million).
However, there are a number of risks that are still looming over the cement industry in this year, such as the increase rate of the positive cases of COVID-19. The possibility of large-scale social restrictions and the slowing economic recovery also could have an impact on the demand, they adds.
Another risk factor is the competition between the producers because the capacity utilization is still relatively low, only 55 percent, which has the potential to cause a price war. Recently, the Business Competition Supervisory Commission charged Chinese’ producer, PT Conch South Kalimantan Cement, because it was proven have carried out ‘predatory pricing, which violated Article 20 of Law Number 5 Year 1999.
Based on data from the public works and housing ministry, the national cement industry is oversupplied by 37 percent or 40.9 MT of cement from the needs of 59.21 MT of cement for infrastructure development in 2020. Entering the 2020 – 2024 National Medium-Term Development Plan, infrastructure development remains a priority for the government. Evidenced by the total funding needs for infrastructure reached Rp2,058 trillion for the period.
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