Cement exports may reach 11 million tons this year

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)