Indonesia: cement demand slows in April

Indonesia: cement demand slows in April

Cement sales in Southeast Asia’s largest economy declined 0.4 percent year-on-year in April to 4.52 million tons, according to data from the Indonesia Cement Association (ASI). Sales declined in Sumatra, Kalimantan, Sulawesi, Bali and Nusa Tenggara, however they increased in Java. In 1Q14, cement sales rose by 3.7% to approximately 14 million tons.

The overall fall in sales in April has been attributed to the legislative election at the beginning of the month and the fact that a number of infrastructure projects are still in the tender stage so have not yet driven cement demand. The Presidential election in July may also lead to a slowdown in cement sales, but aside from this growth is expected to pick up as of May 2014 when the central government plans to lower energy subsidies, resulting in higher electricity costs.

According to the Indonesian Cement Association, this will cause cement production costs to rise by 3 – 5% and force the country’s cement sector to enhance its energy efficiency. The government is currently considering a proposal to offset the higher energy prices with fiscal incentives while the country’s cement industry has requested incentives from the government — including a zero import tax for imported machinery— to compensate for the rising electricity costs.

Edited from various sources

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