Nine Months of 2017, Cement Market in Java Up 11.3%

In Java, the cement market in Central Java grew the highest in nine months of 2017, with a growth percentage of 16.8%, followed by East Java 14.2%, Yogyakarta 13.6%, West Java 9.1%, Banten 7%, and DKI Jakarta 3.1%. On monthly basis, in September 2017, the cement market in Central Java also recorded the highest growth of 20.9%, followed by Banten with 20.6%, DKI Jakarta 20.4%, East Java 6.1%, while the cement market in Yogyakarta down (-0.8%).

In September 2017, the cement market in Java grew by 15.6% to 3.55 million tons compared to 3.07 million tons in the same month of the previous year. This monthly increase in the market will be of particular concern to the cement players while poised to determine the best strategy to look at 2018, according to Worldindustri.com analytics.

The increase in the market, although not yet stable due to high precipitation rainfall at the end of the year, has the potential to change the map of market competition. The trend of the selling price war and the condition of oversupply is expected to gradually ease if the market growth is sustainable. Nevertheless, the competition will still be tapered primarily to gain greater market opportunities than competitors.

Previously, due to the increasingly tight competition, PT Indocement Tunggal Prakarsa Tbk (INTP), the second largest cement producer in Indonesia, lowered the selling price by 10% -12%. President Director of Indocement Christian Kartawijaya said that due to oversupply, the selling price of cement decreased by around 10% -12%. “The selling price drops 10% -12% year on year (yoy),” he told the press at the Indonesia Stock Exchange (BEI), Jakarta.

He acknowledged the over supply and tight competition forced the company to lower its product price by 10% -12%. Not only the price, the company also reduces cement production by around 25% -30%. “The capacity we use is about 70% -75%, so that standby about 25% -30% of our factory. Sometimes we turn off, sometimes we run, so standby, “he explained.

Meanwhile, new cement players who started their gait in early 2015 to date have captured about 12% of the domestic market share, up from 5% in early 2015, according to worldindustri.com research. The aggressiveness of the expansion of these new cement players is one of the factors driving the growth of market share.

Duniaindustri.com rate as new comers (newcomers), it takes extra power, extra capital, and extra strategies (innovation) to enter the market that is so tight cement. However, over time, the aggressiveness of expansion further confirms the growth track record ahead. (* / Editorial team 05)