Cement sales in Indonesia between January and May 2013 rose 6.9 percent to 23 million tons (year on year). In the month May alone, cement sales rose by 2.1 percent (to 4.7 million tons), one of the lowest monthly growth rates seen in the last years. Between January and April 2013, cement consumption had still grown at a pace of 8.6 percent (YoY). These numbers thus seem to indicate that Indonesia's economic growth is slowing down as cement sales reveal the state and pace of infrastructure and real estate projects.

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State-controlled cement producer Semen Indonesia is eager to expand its business outside of Indonesia. After acquiring a - USD $157 million worth - 70 percent stake in Vietnam's Thang Long Cement last year, it is now eyeing to take over a cement factory in Myanmar. Semen Indonesia has set aside USD $200 million for the acquisition, which it plans to conduct next year. Which Myanmar-based cement company will become target of the acquisition is still under evaluation.

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Indonesia Investments presents the updated company profile of Holcim Indonesia, Indonesia's third-largest cement producer. The company, part of the Swiss-based Holcim Group, provides a fully integrated range of cement types, concrete and aggregates to customers (mostly on Java). Indonesia's cement business has been booming in recent years and therefore Holcim is focused on expanding its production capacity through the construction of two Tuban plants. The company holds a 15 to 16 percent market share in Indonesia.

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Indocement Tunggal Prakarsa is the second largest cement producer of Indonesia in terms of market share. Its operations are spread across factories in West Java and South Kalimantan, comprising a total of 12 plants. At end 2012, Indocement’s total installed design capacity was 18.6 million tons of cement per year. Indocement offers a diversified range of cement products which are sold under the “Tiga Roda” brand. Indonesia's cement sector has shown a steep increase in domestic cement production and consumption.

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PT Semen Baturaja Tbk, a state-owned cement producer, will offer 20 to 35 percent of its equity to the public when it conducts its initial public offering (IPO) on the Indonesia Stock Exchange in June or July 2013. Initially, the Indonesian cement company was planning to conduct the IPO in 2012 but disagreement within the House of Representatives (DPR) - the government institution that needs to approve the IPO - resulted in a temporary postponement.

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Although Indonesia's January cement sales showed robust growth of 15 percent to 4.65 million metric tons (year-on-year), the country's cement sales in February slowed to 8.2 percent (4.39 million metric tons) compared to a year earlier; The slowest pace of growth in six months. Strong annual GDP growth has caused a rise in property and infrastructure projects but a delay in some government projects might be behind the slower cement sales growth in February.

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Semen Indonesia, Indonesia's largest cement producer, reported net profit of IDR 4.93 trillion (US $510.9 million) in 2012, a 24.6 percent increase compared to its performance in 2011. Earnings per share increased to IDR 817 from a previous IDR 662. The company benefits of significantly increased cement consumption in Southeast Asia's largest economy. Domestic cement consumption grew 14.4 percent, to 54.9 million tons in 2012.

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Holcim Indonesia, Indonesia's third-largest cement producer, reported net profit of IDR 1.35 trillion (US $140.0 million) in 2012, a 27.0 percent increase compared to the previous year. Earnings per share increased to IDR 176. At the coming shareholders meeting (2 April 2013), the Board of Directors will propose a final dividend of IDR 48 per share. This brings total dividend in 2012 to IDR 80, as an interim dividend of IDR 32 per share was paid in September.

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Last month, Indonesia's cement sales increased by 15 percent to 4.65 million metric tonnes compared to cement sales in January last year. Strong GDP growth of over six percent annually in recent years has caused a rise in property development and infrastructure projects. Per capita cement consumption in Indonesia - which currently stands at around 200 kilogram per year - is still one of the lowest in Asia.

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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.

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Between the years 2011 and 2013 Indonesia’s cement industry seemed to be a goldmine. Double-digit growth in annual domestic cement sales – supported by strong growth in the country’s property sector, particularly on the islands of Java and Sumatra – attracted new foreign investment in cement production facilities, while established cement producers in the Archipelago invested in expansion of their cement production facilities.

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While domestic cement demand remains bleak, Indonesia's cement producers managed to raise their level of production capacity utilization due to a surge in exports. However, export growth will only slightly improve the structural oversupply situation in Indonesia's cement market. With installed annual production capacity estimated at 103.8 million tons of cement, nearly 40 million tons of capacity remains unused.

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For Indonesian cement producers it is vital to maintain their market share amid ongoing difficult times. With Indonesia's total installed annual cement production capacity now being around 100 million tons, while domestic demand is only expected to reach 65 million in 2017, cement players are facing weak prices amid a big oversupply, while foreign demand for Indonesian cement is yet to grow. Meanwhile, due to the arrival of various new cement players in Indonesia in recent years, competition for market share has become increasingly fierce.

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Cement sales in Indonesia - a key indicator to measure the state of infrastructure and property development - declined 3.3 percent year-on-year (y/y) to 5.64 million tons in September 2016. This decline was attributed to fewer cement demand from the property sector (housing and apartments). Meanwhile, shares of state-controlled cement maker Semen Indonesia fell 2.91 percent on Tuesday (11/10) after Jakarta's Supreme Court revoked the environmental permit for the company's USD $320 million cement plant in Rembang (Central Java).

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Indonesia's cement exports are targeted to reach 1.5 million tons in 2016, up 50 percent (y/y) from the realization of approximately 1 million tons in the preceding year. Up to the end of July 2016 Indonesian cement exports had already risen by 63 percent (y/y) this year. Although coming from a low base, rapidly increasing cement exports are highly welcome to offset the nation's rising cement oversupply. Due to the arrival of new cement producers and production expansion of existing cement players, while domestic cement consumption remains bleak, there occurred a big oversupply.

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The year 2015 was a sluggish year for Indonesia's cement industry amid the country's slowing economic growth. Total cement sales only rose 1.8 percent year-on-year (y/y) to 61 million tons, the slowest growth pace since 2009. In the first month of 2016, however, a positive sign was detected. Widodo Santoso, Chairman of the Indonesian Cement Association (ASI), said Indonesian cement sales rose 4.4 percent (y/y) to 5.14 million tons in January 2016 (from the same month one year earlier) on the back of government-led infrastructure development.

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As cement sales in Indonesia are expected to rise nearly 10 percent (y/y) to 66.4 million tons in 2016 on the back of government-led infrastructure development, investment growth and accelerating GDP growth, three cement producers are set to benefit. The three market leaders in Indonesia's cement industry that should see higher sales are Semen Indonesia, Indocement Tunggal Prakarsa and Holcim Indonesia.

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Data terakhir dari Asosiasi Semen Indonesia (ASI) menunjukkan bahwa konsumsi semen di Indonesia menurun 3,8% (year-on-year) menjadi 22,9 juta ton di lima bulan pertama tahun 2015 (dari 23,8 juta ton semen di periode yang sama tahun lalu). Kejatuhan ini adalah penurunan paling tajam dalam konsumsi semen Indonesia sejak 2009 waktu permintaan jatuh hampir 7% pada basis year-on-year (y/y) karena dampak dari krisis finansial dunia. Penurunan saat ini disebabkan oleh perlambatan perekonomian Indonesia dan jatuhnya harga-harga komoditi di luar Jawa.

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The year 2015 may be a good one for Indonesian cement makers. The Indonesian government under the leadership of Joko Widodo is eager to invest heavily in the country’s infrastructure as this is one of the main bottlenecks that blocks higher economic growth. In the Revised 2015 State Budget the central government set aside IDR 290.3 trillion (USD $22.3 billion) for infrastructure development. Surely, the country's large cement producers - Semen Indonesia, Indocement Tunggal Prakarsa, Holcim Indonesia and Semen Baturaja - will benefit from this.

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