Producers to ease cement shortage<\/p>\n
JAKARTA (JP): Cement producers yesterday pledged to increase
\nsupplies to ease domestic shortages, but proposed that the
\ngovernment increase local reference prices to encourage new
\ninvestments to expand production capacity.<\/p>\n
Soepardjo, an executive of the Indonesian Cement Association
\n(ASI), told The Jakarta Post yesterday that in the short term,
\nproducers are ready to increase production with the support of
\nimported clinker, a material used for cement production.<\/p>\n
Director General of Basic Chemical Industries Sujata said the
\ngovernment has instructed cement producers to boost production in
\norder to meet increasing demand caused by industrial plant and
\nhigh rise building construction.<\/p>\n
Cement prices are determined by the government through the
\nintroduction of local price references. Price levels are
\ngenerally higher in areas located far from cement producers,
\nwhich are assigned to supply certain areas.<\/p>\n
Sujata acknowledged that prices have increased particularly in
\nJava, where demand increased substantially to 1.29 million tons
\nin June, up from 999,833 tons the same month a year ago.<\/p>\n
Utilization in Java accounts for almost 70 percent of the
\ncountry's total cement consumption.<\/p>\n
Imports<\/p>\n
The cement association said that a number of its members,
\nincluding PT Indocement Tunggal Prakarsa, PT Semen Nusantara, PT
\nSemen Tonasa, PT Semen Cibinong and PT Semen Kupang will import a
\ntotal of 320,000 tons of clinker in the second semester of this
\nyear to support their increased production.<\/p>\n
Soepardjo said the association's members will import cement if
\nthe increased production still fails to meet demand.<\/p>\n
Increases in both demand and prices run counter to the
\ngovernment's guarantee earlier this year that prices, which shot
\nup in the middle of last year, would not increase again this year
\nbecause the country's nine producers would substantially raise
\noutput.<\/p>\n
Minister of Industry Tunky Ariwibowo said the country's cement
\nproduction, which rose from 17.38 million tons in 1992 to 19
\nmillion tons last year, would further increase to 21.3 million
\ntons this year.<\/p>\n
Analysts said that price increases, which occur annually, are
\napparently engineered by producers who allegedly collaborate with
\ndistributors because demand is actually lower than production.<\/p>\n
The country's demand, for example, actually reached only 17.8
\nmillion tons last year, far lower than the 19 million tons
\nproduced, they said.<\/p>\n
Soepardjo said yesterday that price increases are an annual
\nproblem which can be overcome by expanding production capacity.<\/p>\n
He said investors will not be interested in building new
\ncement plants if prices continue to be set by the government.<\/p>\n
Producers also feel that the current levels of reference
\nprices are too low and unrealistic as compared to production
\ncosts, he said.<\/p>\n
The government, therefore, should increase the current
\nreference prices if it still wants to maintain the pricing
\nmechanism, he added.<\/p>\n
The country's nine producers currently possess a total
\nproduction capacity of 20.1 million tons per annum, which will
\nincrease to 23 million tons as soon as the expansion plant of PT
\nSemen Gresik in East Java starts operating later this year.<\/p>\n
The government, according to Tunky, has licensed the
\nestablishment of 20 new cement plants of a combined capacity of
\n32.2 million tons a year with a total investment of US$4.7
\nbillion. (yns)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/producers-to-ease-cement-shortage-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}