Iran’s cement sector suffering output, export decline

Business Materials 7 December 2017 14:41 (UTC +04:00)

Baku, Azerbaijan, Dec. 7‎

By Fatih Karimov – Trend:‎

Iran's cement sector, is suffering various problems including deep recession in construction activities and an inadequate provision of natural gas to industrial users, as well as a considerable export fall due to global slump in oil prices and regional issues.

The Islamic Republic has exported 3.5 million tons of cement during the first seven months of the current fiscal year (started March 20), according to Abdolreza Sheikhan, secretary of Iran's Cement Industry Employers Association said.

Meanwhile the data of the association indicates that the Islamic Republic’s cement export in the same months of the preceding year, accounted to 4.7 million tons. So the country’s cement export in the 7-month period of the current fiscal year has registered a 25-percent decline.

Iraq is destination for about 50 percent of Iran’s cement. The Islamic Republic also exports cement to Russia, Azerbaijan, Armenia and Persian Gulf states.

In early 2015, Iraq banned cement import from Iran due to low quality, which deprived Iranian producers of their most lucrative market. However the ban was removed later, after extensive negotiations but the volume of shipments decreased significantly.

There were also reports that Russia has returned Iran’s cement shipment due to quality problems, meanwhile Sheikhan rejected the claims, saying that the country has exported some 55,000 tons of cement to Russia during the first seven months of current fiscal year, according to IRNA news agency.

Last year, Sheikhan warned that Iran is gradually losing its domestic and foreign cement markets. Iran has lost its 2014 position as the second cement exporter in the world. The Islamic Republic was the third cement exporter in the world in 2016 and is predicted to stand at eighth place among top cement exporters in 2018.

Iranian cement exporters need to find new markets to replace Iraq. African countries such as Tanzania and Egypt are among the considered destinations.

The latest statistics released by Ministry of Industries, Mining and Trade of Iran also reveals that the country’s cement output has diminished in the current fiscal year.

The country’s cement industry witnessed a decline in its performance as the industrial material’s output over the first six months of the current fiscal year (started March 20) registered a fall by 3.7 percent, year-on-year, to 28.514 million tons.

On a monthly basis 4.914 million tons of cement were produced in the sixth Iranian calendar month (Aug. 22-Sept. 22, 2017), 2.6 percent less compared to the preceding month.

Cement production capacity of Iran soared from 29.5 million tons in 2001 to 83 million tons in 2017. The number of cement producing factories also increased from 30 to 72 in the same time span.

Before the ongoing stagnation, Iranian cement industry experienced a seven-year boom due to a large-scale construction program initiated in 2007 by the previous administration to provide two million low-income people with housing units through free land and cheap credit.

However, the program’s progress slowed down due to lack of funding, which dragged down domestic demand for construction materials in turn.

While the country ranked first in the Middle East and fourth in the world in terms of cement production in 2014 with 75 million tons of output, its global ranking fell to sixth in 2016.

Iran produced 54.1 million tons of cement in last fiscal year (ended March 2017), 6.6 percent less year-on-year.