Cement exports may reach 11 million tons this year
JAKARTA (JP): Indonesia saw over a 450 percent increase in its cement exports in 1998 and this trend is likely to continue this year as most local cement producers have shifted their focus to overseas markets.
According to data from the Ministry of Trade and Industry, cement exports rose to 4.5 million tons in 1998 from 800,000 tons the previous year.
This year, cement exports are projected to increase to some 11 million tons.
A senior official at the ministry said here on Tuesday that cement exports could exceed 11 million tons this year because of an increase in orders received by local producers.
"Some producers, like Semen Gresik and Semen Padang, have upgraded their port facilities while other producers are ready to raise their production capacity to fill the higher export orders," Peter Sampe told The Jakarta Post.
Poor transportation and loading facilities have been the most common problems hampering producers' ability to meet overseas orders, he added.
"If these problems are solved, export activities would be smoother because the country's production capacity and output are fine and the price of its cement is good," he said.
In 1998, the country's total cement production dropped to 22.3 million tons from 27.5 million tons the previous year due to a sharp decline in demand for the commodity on the domestic market.
Last year's total cement production was only about 55 percent of the industry's production capacity.
Peter said production was expected to increase to 33.2 million tons this year to meet the projected rise in demand from both overseas and local markets.
He said about 11 million tons of the projected cement output would be exported while the remainder would be sold domestically.
"We hope to be able to export at least six million tons in the first quarter and expect to export at least five million tons in the second quarter," he said.
He said nearly one million tons of cement were sold overseas in January, about 750,000 tons in February and some 900,000 tons in March.
In the last few months, demand for Indonesian cement has been very encouraging, he said.
"The delivery of new orders may have to be rescheduled until June because we are already busy trying to meet previous orders," he added.
Indonesian cement currently is sold for between US$22.00 and $24.00 per ton in bulk, he said, adding that the price is expected to rise to $26.00 per ton in bulk in the second quarter.
Indonesia exports its cement to more than 20 countries in Asia, South America, the Middle East and Africa, with Bangladesh the biggest importer. Mexico, Chili and Egypt are emerging as new markets for Indonesian cement.
Indonesia's cement producers currently rely on overseas markets to offset the slump in the local market, according to a source at the Indonesian Cement Association.
"We cannot reduce our production output just because there is much less local demand because that will only affect the condition of our machines and increase production costs," said the source, who asked for anonymity.
"Ideally, 80 percent of the total cement output should be absorbed by the local market and the remaining 20 percent by overseas markets. But now this is almost reversed," the source said.
Local demand for cement has dropped due to the prolonged economic crisis. A 30 percent drop in demand was seen in the first quarter of 1998 and the slump in demand is projected to exceed 30 percent in the first quarter of this year, said the source
Data from the ministry shows this year's local demand for cement is projected at 20.8 million tons, only slightly higher than 1998's 19.2 million tons and 6.6 million tons less than the 27.4 million tons in 1997.
An executive at the association predicted total cement exports in the first quarter of this year would double the exports recorded in the same period last year. (cst)