JAKARTA (TheInsiderStories) – In 2018, national cement sales reached 75.2 million tons, or up 8.6 percent, compared to the previous year, said the association. A total of 69.51 million tons are sales in the domestic market and 5.7 million tons from the export market.

But compared to the installed capacity of the cement industry, which reached 109 million tons, the figure is still relatively far, which shows utilization of around 70, said the chairperson of the Indonesian Cement Association Widodo Santoso told Investor Daily early this week.

He explained, the national cement exports surged 97 percent in 2018 to 5.7 million tons compared to the previous year of 2.9 million tons. This increase supported by the utilization of domestic cement factories which have overcapacity of up to 30 percent.

“Cement producers are taking the initiative to hit the export market in cement and clinker importing countries such as Bangladesh, Sri Lanka, Africa, Australia, the Philippines, East Timor, and even to China,” said Widodo.

He continued, the export opportunities were also increasingly open with the strong position of the United States (US) Dollar against the Rupiah, which could ease logistics costs. If US dollar falls below Rp14,000, exports will decline, especially for destinations like Africa, China, the American continent with high transportation costs,” he said.

In 2019, ASI targets cement exports to reach 7 million tons, up 23 percent from the 2018 results. This export still be a national industry choice to reduce the overcapacity that continues this year.

Despite a sharp increase in exports, said Widodo, the uptake of cement in the domestic market did not experience a significant increase. Throughout 2018, domestic cement consumption only grew 4.9 percent to 69.51 million tons.

“The increase of 3.16 million tons was dominated by increased demand in Java and Sumatra, which was around 74 percent. The remaining 26 percent came from Sulawesi, Kalimantan, Nusa Tenggara and East Indonesia,” he said.

He continued, the biggest cement demand is for housing to reach more than 70 percent, as well as the remaining projects and infrastructure. While, the realization of consumption in 2018 is 50.75 million tons in the form of bag cement (73 percent) and bulk cement 18.77 million tons (27 percent).

“For the 2019 projection, with a good infrastructure budget from the government and predictions of economic growth of more than 5 percent, we still expect growth in domestic cement consumption, but probably will not exceed 2018,” said the chairperson.

The organization estimates that domestic cement sales growth will only be around 3-4 percent supported by infrastructure and national strategic projects, rural development, and a million house programs from the government.

He stated, “Property is also expected to grow in 2019, so that it can increase cement demand in the domestic market.”

Meanwhile, state-owned cement producer, PT Semen Indonesia Tbk (IDX: SMGR) reported until the end of last year was able to to sold 33.6 million tons or up 7 percent compared to 2017.

The spokesman Agung Wiharto revealed, the growth of the company’s cement sales was sustained by higher export sales but the domestic cement sales only grew 2 percent to 27.8 million tons.

by Linda Silaen, Email: linda.silaen@theinsiderstories.com