Local cement demands drops 30%

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)