How is the cement industry currently doing? What are the key players of development for the industry? How does it stay resilient? How is the government supporting the industry?
In the book about Environmental Solutions, cement is considered as one of the main industries necessary for sustainable development, and is considered as the backbone for development. In 2021, the global cement market size was valued at USD 326.81 billion and is projected to grow from 340.51 billion in 2022, exhibiting a CAGR of 5.1% according to Fortune Business Insights.
The impact of the pandemic has created a stagnant growth of the industry, which caused lower than anticipated demand across all regions. Based on Fotrune Business Insight’s analysis, the industry projected a decline of 3.6% in 2020. Considering that the increasing population also increased the need for residential buildings, this caused the industry to recover from the decline. The growing need and demand for public infrastructure and non-residential buildings has created a window of opportunity for consumption.
With that, what do you think are the opportunities of the cement industry? What do you think are the key players of development for the industry? How is it holding up during the pandemic? Read more to find out!
Market Overview of Cement in Indonesia
Indonesia’s cement production amounted to an estimated 66 million metric tons, which made Indonesia the sixth leading cement producer globally within the year. Even during the pandemic, the byproduct of Covid-19 seems relatively moderate yet manageable. During this phase, infrastructure projects and residential commercial projects are expected to support the absorption of domestic demand.
The development of Indonesia’s new capital city, IKN, in Sumatra and Eastern Indonesia are making developers take advantage of the increasing demand. The company of Semen Indonesia itself, they plan to focus on the domestic market in the first half of 2022 due to the better availability of coal supplies.
The Bandung Institute of Technology has estimated a 33% rise in Indonesian cement consumption to 84MT/year from the start of construction of the country’s planned new capital city. The national coal consumption is also forecasted to rise accordingly by 9% to 126.5 mt/year.
PT Semen Indonesia has also revealed that they gained a net profit of IDR 2.02 trillion in 2021. Of the total dividends distributed, the government received IDR 522.34 billion due to 51.01% share ownership. With this, we could say that the government has a big role in the development of this industry as it is very involved and gives immense support for this industry.
China as Indonesia’s Main Cement Export
Focusing back to PT Semen Indonesia, they plan on targeting China as the main export destination country. Aside from China, Semen Indonesia director of Finance and Risk Management also said that the company also plans to export cement to Bangladesh, Australia, and Taiwan.
Correspondingly, Semen Indonesia has also started to export its products to the American market, which was successfully done because of the partnership between Semen Indonesia and Japan’s Taiheiyo Cement Corporation. Semen Indonesia thinks that this export is done as part of the optimization capacity and funds. By doing exports, Semen Indonesia disclosed that they can reach 6-7 million tonnes per year, or even 10 million tonnes. Most of the location comes from Semen Padang, Semen Tonasa from Cilacap, and Tuban. On the domestic market, the price of cement export has also reached USD 46 per tonne, which is dominated by the Javanese population, rounding off to 55%.
International and Players of Cement in Indonesia
There are international and local players of cement in Indonesia, the various companies include:
- Beumer Group from Germany
Germany based Beumer Group stated that they have secured a contract with semen Tonasa to supply its 50 – 50 kg bag palletising system for the producer’s Celukan Bawang Cement plant in Bali. The multi programme interface offers custom adjustment between all packing patterns. They target to install and commission the machine in the third quarter of 2022.
- Bruks Siwertell from Sweden
Solusi Bangun Indonesia has ordered a Siwertell screw-type ship loader from Seweden Based Bruks Siwertell via contractor Hutama Karya. The ship loader will be used at the Tuban terminal in Java and the ship loader has a continuous cement handling capacity of 1000t/hr and can load conventional bulk. It will be assembled on site and is planned for delivery at the end of 2023.
- Heidelberg Materials
Heidelberg Cement has operated in more than 50 countries around the world and stands for competence and quality. Their core activities include the production and distribution of cement and aggregates, which are the two essential raw materials for production of concrete and asphalt.
Enter Indonesia’s Cement Industry with BRIGHT Indonesia
It would take a lot of in-depth research about Indonesia’s cement industry. In order to enter the Indonesian market, you would need the right local partner to assist you.
BRIGHT Indonesia is an ideal business partner for you. We will assist you on the ground, including virtual assistants during the mission, logistical planning, and detailed communication. It can cause your company to focus on developing partnership cooperation rather than the hassles of the business trip.
BRIGHT Indonesia provides several services such as Market Insight Research, Business Partnership Engagement, Management and Strategy Consulting, and Foreign Direct Investment. The services will help your business to:
- Provide assistance for you in expanding and developing your business by identification of potential partners.
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