With only Sumatra and Papua defying the trend, domestic cement consumption declines due to low purchasing power and postponed IKN projects. The local market is struggling due to a glut of inventories at hardware stores across the country, even if clinker exports have gone up by 21.6%. In an attempt to boost H2 sales, the industry is counting on impending school construction projects.
Key Facts & Background
Market Contraction
- H1 2025 Sales: 27.78M tons (-2.5% YoY)
- Production Drop: 28.76M tons (-5.8% YoY)
- Regional Variance:
- Sumatra: +4.9% (toll road projects)
- Maluku/Papua: +5.0%
- Java/Bali: -8.2% (IKN delays hit hardest)
Export Divergence
- Clinker Surge: 6.54M tons (+21.6% YoY) → Bangladesh demand
- Cement Export Crash: 483,165 tons (-12.4% YoY)
Infrastructure Impact
- IKN Contribution: Previously 10-15% of national sales
- New Hope: KemendiktiSaintek school projects (2025 start)
Strategic Implications
Cracks in Indonesia’s building pipeline are exposed by the cement slump. IKN projects, which account for 10–15% of historical demand, are drastically slowing down, leaving producers with a revenue deficit of Rupiah 12 trillion (about $800M). Retailers’ excess inventory points to inaccurate demand forecasting, which is likely to result in production reductions in H2. Nonetheless, there is a strategic opportunity due to the 21.6% increase in clinker exports to Bangladesh.
The sales map illustrates Indonesia’s uneven progress on a regional level. While Papua benefits from special autonomy funds, Sumatra’s prosperity is fueled by continuous construction of the Trans-Sumatra Toll Road. The decline of Java demonstrates how reliant the heartland was on IKN propaganda. Large-scale infrastructure won’t be replaced by the upcoming school construction program, which aims to build more than 5,000 facilities.
This slump helps investors distinguish between those who are resilient and those who are not. Companies with:
- Export capabilities to absorb domestic shocks
- Sumatra/Papua market strongholds
- Vertical integration to profit from clinker margins
will outperform. Others may face consolidation pressures. The ASI’s optimistic 2% full-year growth forecast hinges on timely stimulus rollout – a gamble as consumer spending remains weak.