Weak Weather Conditions Undermine Indonesia's January Cement Sales
Cement consumption in Indonesia fell to 5.27 million tons in January 2017, down 2.3 percent year-on-year (y/y) from the same month one year ago. This decline was blamed on the intense rainfall in the nation's regions that managed to obstruct progress with various projects. Widodo Santoso, Chairman of the Indonesian Cement Association (ASI), said the decline in cement demand was seen in nearly all regions, including Sumatra, Java, Kalimantan, and Nusa Tenggara.
In the first month of 2017 weather conditions were not conducive in Indonesia. Storms and the high amount of rainfall caused floods across various regions that undermined progress with construction projects, including housing projects. The weather conditions in Indonesia are expected to remain weak until March. Meanwhile Santoso added that various infrastructure projects are yet to see groundbreaking and therefore contributed to subdued cement demand at the year-start.
The exception to the rule were Maluku and Papua in the eastern part of Indonesia where a number of power plant and smelter projects are still ongoing despite some weather-related problems. In the Maluku & Papua region cement sales in fact rose 21 percent.
Indonesian Cement Sales in January 2017 per Island/Region:
| Island/Region | Cement Sales |
YoY Growth |
| Java | 2,940,000 | -0.6% |
| Kalimantan | 315,000 | -13% |
| Sumatra | 1.030,000 | -6.3% |
| Sulawesi | 429,000 | - |
| Bali & Nusa Tenggara | 312,000 | -2.7% |
| Maluku & Papua | 143,000 | +21% |
Source: Indonesian Cement Association (ASI)
Due to subdued cement demand in Indonesia, there are reports of rising stockpiles of cement and clinkers at local factories. For cement producers this is a problem, especially if weather-related issues persist up to March. Moreover, cement supplies have increased after three new cement plants became operational at the end of 2016: Conch Semen (in West Papua), Semen Tiga Roda (in West Java) and Semen Bosowa (in South Sulawesi).
Cement sales are an important indicator to measure a nation's progress with infrastructure and property development. Rising property development (if supported by rising sales) implies people's purchasing power and confidence is good.
Read more: Overview & analysis of Indonesia's Cement Industry
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)