RI to export 5m tons of cement

RI to export 5m tons of cement

JAKARTA (JP): The Indonesian Cement Association projects the country's cement exports will increase more than sixfold this year as producers boost exports to offset the slump in local demand.

The association projects exports will reach five million metric tons by year's end, compared to the 800,000 tons exported last year. According to its data, cement exports had reached 2.5 million tons as of September, of which the country's largest cementmaker, PT Semen Gresik, and its subsidiaries contributed 800,000 tons.

Semen Gresik has targeted to export up to 1.25 million tons this year.

Unlike in the building boom of the mid-1990s when the country suffered shortages, the industry is now suffering a huge oversupply of about 10 million tons due to falling demand and increasing capacity.

An association executive who requested anonymity said on Wednesday that domestic demand for cement was likely to fall 35 percent this year to 20 million tons, from 30 million tons last year.

Next year, he said, domestic demand for cement would likely remain weak. "If there is an improvement, it would just be 3 percent to 5 percent."

He said combined production capacity of Indonesian cement firms totaled about 45.6 million tons per annum, but actual production would not surpass 30 million tons this year.

"We actually have an export ability of up to 10 million tons, but we would not be able to do that fully because there is a problem in the delivery system because most export destinations are too far away from Indonesia, for instance, Africa or America.

"We could not export our products to Asian countries right now because they also have economic problems like us here."

Several Asian nations which were formerly cement importers have turned to exporting.

Due to the increasing supply in the international market, he said, cement prices had slumped. The price of Indonesia's cement is now US$23 per ton free on board (fob), a huge decrease $35 per ton fob in 1997.

Besides Semen Gresik, all of the country's large cement producers have already shipped some of their excess production to export markets.

PT Indocement Tunggal Prakarsa, controlled by the Salim Group and the country's second largest cementmaker, exported 575,000 tons of cement during the first half of this year. It is targeting to export 1.35 million tons in the second half of this year.

PT Semen Cibinong under the Tirtamas Group exported 505,000 tons during the first five months of this year. (29)