Indonesia’s cement exports will likely decline this year, as most of the country’s major cement producers are focusing on the domestic market, an industry leader says.
“Cement exports are likely to decrease to one million or two million tons this year from three million tons last year as producers will allocate a larger part of their production to meet the surging demand in the domestic market,” Urip Timuryono, the chairman of the Indonesian Cement Association (ASI), told The Jakarta Post on Monday.
Indonesia has eight cement companies with a total capacity of 53 million tons per annum. Three of them — PT Semen Padang, PT Indocement Tunggal Prakarsa Tbk. (“Indocement”) and PT Semen Cibinong (Holchim) — were the major contributors to last year’s exports, destined mostly for Asian countries such as Bangladesh, Sri Lanka and Brunei.
Urip said that to meet domestic and export demands, cement companies plan to increase their total production to 45 million tons this year from 41.5 million tons in 2010.
He added that Indonesia imported 1.5 million tons of cement from Malaysia last year in order to meet the growing domestic demand.
The increase in house construction, partly due to relatively low interest rates, has contributed to the surge in cement demand in the domestic market, he said.
“The government’s program to develop infrastructure such as toll roads and bridges is also contributing to the high demand,” he added.
When asked whether the increasing domestic demand would prop up prices, Urip said that the ASI did not have the authority to determine prices because the authority belonged to each company.
He said a sack of 50 kilogram cement currently cost about Rp 50,000 (US$5.80).
PT Semen Gresik president director Dwi Soetjipto said the high demand for cement would not necessarily boost the price. “The price depends on production costs and market buying ability,” he said.
According to Dwi, PT Semen Gresik will produce 20 million tons of cement in 2011.
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