Building Boom Prompts Surge in Cement Demand

By webadmin on 11:08 pm Sep 30, 2011
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Faisal Maliki Baskoro

Cement sales are forecast to rise further this year amid aggressive growth in the property market and a build-up in infrastructure projects, a group representing the nation’s cement producers says.

The Indonesian Cement Association (ASI) now forecast 2011 sales to rise 10 percent on a year earlier, a sharper increase than the 6 percent rise it forecast earlier in the year.

Total cement sales are estimated to rise to 44 million tons this year, said ASI chairman Urip Timuryono.

“The increase in cement sales is supported by growth in the property sector and government spending on infrastructure development,’’ said Urip, a former president director at Semen Gresik, the country’s largest cement maker.

Cement, car and motorcycle sales are basic indicators for economic growth. Growth in these sectors moves in line with overall economic growth.

Indonesia’s government forecasts the economy to expand 6.5 percent this year, after growing 6.1 percent in 2010. It unveiled a plan earlier this year to construct projects such as toll roads and sea ports in a bid to fuel economic growth.

Cement sales slowed in the third quarter this year due to the Ramadan in August, when business activity slackened. Sales in August declined 18 percent to 3.6 million tons from the previous month.

“The decline is a seasonal factor, and we have anticipated that,’’ Urip said. He predicted demand would pick up in the fourth quarter.

Total cement sales — both locally and abroad — rose 8.7 percent to 31.2 million tons in the eight months to August from the same period last year. Sales in the domestic market rose 13 percent to 30.4 million tons, while exports declined to 780,000 tons.

“Cement sales in September may experience a declining trend,” Urip said, without disclosing details.

East Java-based Semen Gresik announced plans to increase annual cement production to 30 million tons by 2015, up from this year’s 20-million-ton estimate and last year’s 19.5-million-ton production.

Semen Gresik also said it would build two new cement plants that would add 5 million tons a year to its total production capacity.

The first plant, in Pangkep, South Sulawesi, is expected to be operational this year and another one, in Tuban, East Java, will be ready next year.

Shares in Semen Gresik and Indocement Tunggal Prakarsa moved in the opposite direction in the local stock market on Friday. Shares of Semen Gresik fell 2.9 percent to Rp 8,300 while share of Indocement Tunggal Prakarsa rose 0.7 percent to Rp 14,000.