Low demand hurting cement production
Low demand hurting cement production
The Jakarta Post, Jakarta
The country's cement output is expected to grow by a maximum of 3
percent this year, falling short of the initial target primarily
due to low domestic demand, according to the Indonesian Cement
Producers Association (ASI).
ASI said on Monday the industry only saw a 0.4 percent rise in
domestic demand during the first semester, from the same period
last year.
"Total national demand in the January-June period reached
12.62 million metric tons, a slight increase from 12.56 million
metric tons the year before," ASI said in a statement as quoted
by Antara.
The association predicted earlier that the cement output would
grow by between 5 to 10 percent this year on the back of rising
local demand. Cement output in 2002 grew by 6.8 percent to 27.19
million metric tons.
President of the country's largest cement producer PT Semen
Gresik Satrio confirmed the weaker outlook.
He said that while there would be an increase in demand in the
second half of the year, the pace would not be fast enough to
meet the initial output projection.
"We're expecting a rise (in demand) in the second semester --
in fact, demand in July-August already increased by 11 percent,
but toward the year's end, it would only grow an average 2 to 3
percent," he said.
Satrio said that as of June, the company's total sales volume
stood at 5.41 million metric tons, a decline from 5.65 million
metric tons booked in the same period in 2002, most of which went
to the domestic market.
The figure included output from the company's two
subsidiaries, PT Semen Padang and PT Semen Tonasa.
Analysts have attributed the low demand to a slow pace of
recovery in the property sector, as well as the slow progress of
government development projects.
The slower progress in government-funded projects was
indicated in the low realization of state budget development
expenditures. Of the full-year target of Rp 65.1 trillion, the
realization in the first semester stood at Rp 14.1 trillion.
A stronger growth in the cement industry is considered crucial
for the economy, not only because the industry employs many
workers, but also because it would be seen as a clear sign of an
economy moving toward recovery.
As reported earlier, PT Indocement Tunggal Prakarsa and PT
Semen Cibinong, respectively the country's second and third
largest cement producers, recorded a decline in their first-
semester net profits because of the low demand.
Indocement and Semen Cibinong together handle around half of
domestic cement sales, while the remainder is dominated by state-
owned Semen Gresik.