Cement Industry Indonesia: Export Growth from Low Base
The Indonesian Cement Association (ASI) has high hopes for Indonesia's cement exports this year. Widodo Santoso, Chairman of the ASI, said he wants the nation's exports grow to the range of 2 - 3 million tons in 2017, up from 1.5 million tons in the preceding year (implying nearly 100 percent year-on-year growth). By the year 2019 the association targets to see 5 million tons of cement exports shipped abroad from Indonesia.
Due to the arrival of new players and expansion of existing players in Indonesia's cement industry over the past couple of years, the country's total annual installed cement production capacity has reached beyond 100 million tons, while domestic demand will most likely not reach 69 million tons this year, implying a major oversupply (and thus pressure on cement prices). Therefore, export growth should bring some new life into cement players' corporate earnings and somewhat help to combat Indonesia's cement oversupply situation (although the targeted 2-3 million tons of cement exports have little significance when compared to the potentially +30 million tons of cement oversupply in Indonesia).
Problematically, Indonesia is not the only country that has a major cement oversupply situation. Sluggish global growth over the past years has also reduced cement demand from property and infrastructure developers in other nations. Therefore, there are plenty of competitors on the global level that offer their cement at attractive prices. Big competitors are Thailand, Vietnam, Japan and South Korea.
Still, Santoso is optimistic that Indonesia can boost its cement exports this year, particularly to Africa, the Middle East, Bangladesh, Sri Lanka, Australia and Timor Leste because domestic cement production in these countries is very limited.
In 2017 at least three new cement factories will become operational: (1) Semen Padang in West Sumatra (2.5 million tons annual production capacity), (2) Conch Cement in West Papua (1.5 million tons capacity), and (3) Semen Baturaja in South Sulawesi (1.5 million tons capacity). Perhaps a new cement plant of Semen Indonesia will also start operations later this year.
Indonesian Cement Sales 2008-2016:
| Year | Cement Sales |
YoY Growth |
| 2016 | 62 million | +1.6% |
| 2015 | 61 million | +1.8% |
| 2014 | 60 million | +3.3% |
| 2013 | 58 million | +5.6% |
| 2012 | 55 million | +14.6% |
| 2011 | 48 million | +20.0% |
| 2010 | 40 million | +4.2% |
| 2009 | 38.4 million | +1.1% |
| 2008 | 38 million | - |
Source: Indonesian Cement Association (ASI)