Cement exports increased 188 percent in first half

JAKARTA (JP): Cement exports rose 188 percent to 4.9 million tons in the first semester of the year from the same period last year, the Ministry of Industry and Trade announced.

During the January-June period, the country produced 11.7 million metric tons of cement, a 13.9 percent increase from 10.3 million in the corresponding period of 1998.

The director of nonorganic chemical industries at the Ministry of Trade and Industry, Ida Bagus Agra Kusuma, said on Wednesday that exports began to pick up in February when a number of local producers sold their products overseas to compensate for sluggish demand in the domestic market.

"Most producers currently are relying on overseas markets to offset the slump in the local market. Exports are badly needed to maintain the utility level of their plants," he said.

"Our cement is currently very competitive in overseas markets due to the sharp depreciation of the rupiah."

Cement exports are projected to increase this year to about 11 million tons, a 150 percent increase from 4.5 million tons in 1998, he said.

"I'm quite optimistic that our cement exports this year could exceed the targeted 11 million tons due to an increase in orders received by local producers."

Cement exports in July are expected to reach 1.1 million tons, he said.

The product is exported to more than 20 countries in Asia, South America, the Middle East and Africa, with Bangladesh the biggest importer. Mexico, Chile and Egypt are emerging as new markets for Indonesian cement.

Agra said cement production was expected to increase to more than 30.7 million tons this year, a 38 percent increase from 22.3 million tons in 1998.

About 11 million tons of the amount will be exported, he said.

"We hope to be able to export over six million tons in the second semester."

Despite booming exports, Agra was confident there would not be a disruption in domestic supply as total production was far below annual production capacity of 47.3 million tons.

Agra said cement producers could not reduce production amid a slump in local demand, saying any cut would affect the condition of their machinery and increase production costs.

Most of the country's cement producers are operating at 70 percent of capacity, which is still higher than last year's 65 percent.

He said the country recorded an over 450 percent increase in cement exports in 1998 from slightly over 800,000 tons in 1997, and the trend was likely to continue this year.

Rising prices

Cement prices in the local market have reportedly increased around 15 percent in recent weeks due to scarcity of supply.

Agra attributed the increase to local cement producers raising their prices to compensate for the 60 percent hike in the prices of raw materials, such as gypsum, coal and paper.

He said that local producers were forced to increase their prices from 10 percent to 15 percent due to the rise in raw materials and transportation costs.

Domestic stocks of cement in early July reached 1.43 million tons, enough to supply the domestic market for the whole month, he added.

Minister of Industry and Trade Rahardi Ramelan said earlier this week that he would summon local cement producers to discuss the price rise.

Rahardi said the government did not plan to regulate cement trading and promised continued efforts to liberalize cement distribution and importation.

Agra predicted domestic demand would continue to be sluggish this year despite the first semester's slight improvement.

Domestic demand for cement reached 8.9 million tons in the first half of the year, a slight increase from 8.76 million tons recorded in the same period of 1998.

This year's local demand for cement is projected at 19.2 million tons, the same level with 1998.

In 1998, the country's total cement production dropped to 22.3 million tons from 27.5 million tons the previous year due to the sharp decline in domestic demand.(gis)