Karcement JSC News

20.06.2016

The crisis in the cement industry in Iran?

About half of the Iranian cement producers at risk of going bankrupt by the end of the year, if the pressing problems of the industry are resolved - warned a member of the Cement Employers Association Mohammad atabaque at a meeting of the Tehran Chamber of Commerce, Industry, Mines and Agriculture. Reduced oil revenues, the decline in government spending, the recession in the construction sector and the loss of export markets are the major ills affecting the cement industry of Iran. "Given the significant investments made in the cement industry in recent years, a huge number of jobs created in the sector, should be taken urgent measures to bring the industry out of the current crisis", - said atabaque. Cement production has a tendency to decrease. In 2015, production amounted to 58.6 million. Tons, which is 12% less compared to a year earlier. Exports also suffered and declined from about 18 million. Tons to 15 million. Tons last year, indicating a decline of 20%. The trend of capacity expansion of the Iranian cement industry came to the stagnation in 2015, the first time in more than 15 years. Prior to that, the production level was at an average of 79.7 million. Tons per year. The sharp drop in production led to a fall of Iran in the world rankings of the leading cement producers, as the country moved by three steps down in 2015 from fourth place occupied in previous years. Atabaque said Iran remains in first place in the world in the export of cement, but it is expected it will have to give up this title in the near future, if we fail to find new export markets. The Ministry of Industry and Trade has big plans for the development of the sector. Strategic Plan, the most comprehensive industry development plan of Iran, at least for 15 years, was announced in August last year. The plan calls for increased production of cement by 60%, to figure reached 120 million tons per year by the end of 2025. Under this schedule, the cement industry is required to increase exports by 68% over the next decade, up to 32 mln. Tons per year. The plan assumes that Iran will be able to export 21 million. Tons of cement per year by 2017. The main reason for the crisis is the sharp decline in regional cement demand after the fall in oil prices and subsequent reduction in infrastructure projects in some of the main exports of Iran, including Iraq, UAE, Saudi Arabia and Azerbaijan. The crisis reached its peak in April 2015, at a time when Iraq, which accounted for about 65% of Iran's cement sales abroad, banned the import of foreign cement into the country to support domestic producers.