European cement manufacturers in Indonesia are to face more aggressive pricing and lower profit margins due to the Indonesian cement market’s oversupply, according to Moody’s Investors Service. In January, the Indonesian government imposed a price cut on cement sold by state-owned companies, which resulted in a 6% fall in the average selling price.
Falk Frey, a Senior Vice President at Moody’s, said: “The unparalleled supply-demand imbalance in the Indonesian cement market will weigh on European cement companies pricing power and EBITDA margins, based on their level of exposure via regional subsidiaries, leading to a more aggressive pricing environment.”
However, the current capacity ramp-up should stabilise, and expected consumption growth should restore supply-demand balance in 2017-2018.
Edited from press release by Angharad Lock
Read the article online at: https://www.worldcement.com/asia-pacific-rim/24082015/moodys-european-cement-manufacturers-face-aggressive-pricing-422/