Local cement demands drops 30%

JAKARTA (JP): Domestic demand for cement has sunk by 30 percent since the beginning of this year due to the deepening economic crisis, state-run PT Semen Gresik president Urip Timuryono said yesterday.

Urip said the crisis was causing the reduction or cancellation of most construction projects.

Semen Gresik's sales this year have also fallen by 20 percent.

"The utilization of our plants is about 70 percent to 75 percent of capacity. If nobody is buying, our factories may close," he said.

National cement production capacity will be 35.8 million metric tons by the end of this year. Some new factories, such as those in Tuban (East Java) and Cilacap (Central Java), have not started producing fully.

Last year, domestic demand for cement was about 27.9 million tons.

Urip said the total production capacity of Semen Gresik, including subsidiaries PT Semen Padang in Padang (West Sumatra) and PT Semen Tonasa in Tonasa (South Sulawesi), would reach 17 million tons by the end of this year, up from 13 million last year.

Semen Gresik currently controls 40 percent of the country's cement market.

The company is trying to increase its exports, which now make up 10 percent to 15 percent of its sales, to at least 25 percent in the first semester, Urip said.

It was trying to break into the United States and African markets as the rupiah's depreciation made its cement much more competitive there now, he said.

Semen Gresik currently exports its bulk product to neighboring countries like Singapore, Myanmar, Vietnam, Bangladesh.

Urip said cement demand in Southeast Asian countries such as Thailand, Malaysia and the Philippines was much less than the total capacity.

Semen Gresik booked Rp 232 billion (US$17.3 million) in net profit last year, up from Rp 219 billion in 1996.

Urip said he could not forecast the company's net profit this year due to the nation's economic uncertainty. (das)