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.