This report profiles Indonesia’s cement industry, discussing market trends through 2013 and outlook for 2014 and beyond. The report also highlights leading players in the sector including PT Semen Indonesia (Persero) Tbk, PT Indocement Tunggal Prakarsa Tbk and PT Holcim Indonesia Tbk.

The cement industry is one of the strategic industries of Indonesia. The industry is a feeder for several other core sectors like infrastructure, housing and construction, and hence it acts as one of the most important sectors of the economy. The industry went through a period of high growth during the last five years making Indonesia one of the top 10 cement producing countries in the world.

Indonesia’s cement industry experienced a good year in 2013 with both demand and production recording strong growth. Recent capacity expansion by major companies helped to raise the overall cement production, bringing down the demand-supply gap to a large extent. However, 2014 might prove to be a tough year for the cement industry. Persistent high interest rates might pull down the economic growth thus bringing down the consumption. Added to that, impending hike in electricity rates will hurt the margins of the leading players. Nevertheless, the industry is expected to soon revive from this temporary lull thanks to robust housing demand.

Key Points:

• The cement industry saw a period of high growth during the last five years (2008-13), with domestic consumption growing at a CAGR of 8.8%.

• Indonesia’s booming construction and real estate sectors have in turn increased the demand for cement. During 2008-12, the country’s total designed capacity grew at a CAGR of 7.1%.

• As a result of growing domestic demand, the export market saw successive declines in the last few years. Total cement exports from Indonesia reduced from around 8MT in 2007 to less than 1MT in 2013.

• Large scale capacity additions during the last few years have accelerated domestic cement production. During 2010-13, the country’s cement production grew at a CAGR of 13.8%.