Cement Industry of Indonesia: Country’s Cement Companies Continue to Face Excess Capacity
It has been a while since we last published an article on Indonesia’s cement industry. Therefore, it is interesting to present an update. Indonesia’s cement industry was a truly booming industry in the early 2010s as domestic cement demand was strong around that time on the back of the construction of property and infrastructure.
In fact, cement consumption in Indonesia was so strong that it attracted newcomers from abroad who established new cement manufacturing plants in Indonesia, while existing cement players engaged in various expansion plans. Based on data from the Industry Ministry of Indonesia, a total of 14 big cement manufacturing companies are currently active in Indonesia.
However, by 2014 this started to cause problems as domestic cement demand began to lose momentum amid slowing national economic growth, while at the same time installed cement production capacity continued to increase amid direct investment realization, causing growing cement oversupply (excess capacity) on the Indonesian market. And a result of excess capacity, cement prices fell (amid fierce competition for market share), implying corporate earnings of cement makers were affected.
Unfortunately, in the present, the oversupply situation persists. When we look at the 2023 data, we can see that Indonesia had a total cement production capacity of 119.1 million tons, but total domestic cement demand only reached 65.5 million tons that year. Meanwhile, despite rising over the years, exports can only lend a small helping hand as Vietnam is a very strong competitor on the international market.
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