Cement consumption to reach record high this year

Cement consumption to reach record high this year

Adianto P. Simamora, The Jakarta Post, Jakarta

Although the economy is still struggling to recover from the
devastating impact of the 1997 economic crisis, domestic cement
consumption is expected to jump to an all-time high of 29 million
tons this year, according to the Indonesian Cement Association
(ASI).

This estimate exceeds even the precrisis domestic consumption
level of 27 million tons.

The association, however, did not say what was behind this
expected robust demand. But industry experts said that new
housing projects and renovations would drive demand this year.

Tim Clough, president of publicly listed PT Semen Cibinong,
told The Jakarta Post that new housing projects would boost
domestic cement consumption this year to precrisis levels.

Ahmad Solichin, a cement sector analyst at securities firm
Vickers Ballas, said that although the overall construction
sector had been in the doldrums, cement consumption had been on
the rise since 2000, thanks to housing construction.

"Demand for cement will hit the precrisis level this year with
some 78 percent to be used mainly for the construction of new
residential houses and renovations," Ahmad said.

According to property consultant Panangian Simanungkalit, some
110,000 new houses will be built this year.

Data from the ASI shows that in the first six months of this
year, domestic cement consumption reached 12.6 million tons.

To meet the higher demand this year, the country's cement
firms will have to boost their average capacity to 72 percent
from 65 percent last year. In 1998, the average capacity was only
50 percent.

Domestic demand for cement plummeted at the start of the
regional economic crisis, which hit Indonesia in mid-1997. Demand
dropped by 31 percent to 19 million tons in 1998 from 27 million
tons in 1997.

The property sector, which had been fueling demand for cement
before 1997, was badly affected by the crisis, forcing many
developers out of business.

Elsewhere, ASI said cement exports this year would reach eight
million tons, lower than last year's 9.5 million tons.

Indonesia exported some 4.5 million tons of cement and clinker
in 1998 following the plunge in domestic demand, while production
reached some 22 million tons.

The country's cement producers are Semen Gresik, Indocement
Tunggal Perkasa, Semen Padang, Semen Baturaja, Semen Cibinong,
Semen Tonasa, Semen Bosowa Maros and Semen Kupang.