Reports of cement shortage have been circulating for more than a week in Iranian media outlets. Provincial markets have rationed the supply of this major building material, because of which prices have shot up.
According to a report by the Persian-language daily Shargh, power outages have contributed to a slowdown in factory activity and a decline in cement output.
The shortage of cement has brought civil development projects, including freeway construction projects and the government-sponsored affordable housing project — the so-called National Housing Initiative, to an abrupt halt and made workers redundant.
“Contractors have been hit by cement factories stopping production. You can’t find bagged cement in Tehran and many other large cities; even contractors of the National Housing Initiative are facing material shortages. The price of a bag of cement has increased to 1 million rials ($4),” Ramin Gouran Ourimi, secretary of the Association of Mass Housing Builders, told Persian-language weekly Tejarat-e Farda.
This comes as on July 18, the government allowed cement and steel factories to operate at 30% of their capacity during the day and at 100% of their capacity from 12:00 midnight to 8:00 a.m.
Following chronic power shortages last month and rolling blackouts across the country, Iran Power Generation, Distribution and Transmission Company (locally known as Tavanir) ordered steel and cement production factories to reduce electricity consumption or face closure.
“The measure is in line with plans to alleviate the worsening power shortages. Steel and cement companies should close for 2-3 weeks and use the time for repair and maintenance,” Mostafa Rajabi Mashhadi, Tavanir’s spokesman, was quoted as saying by Fars News Agency.
Summer demand has led to severe power and water shortages in recent weeks in most regions, which have caused blackouts and dry taps. Protests have been reported in some southern provinces where the mercury has risen above 50 degrees Celsius.
“A number of freeway projects have been troubled with cement shortage over the past month,” Khodayar Khashe’, secretary of Freeways Investor Companies Association, said.
“As we speak, Section II of Tehran-North Freeway Project is currently making only 20% progress. This will prolong projects and discourage investors. Development project will lose their economic viability as well.”
Reza Jamaranian, the head of Cement Industry Employers’ Association, said cement cannot be kept in silos for more than a week.
“In fact, cement is not a product that can be stored; the maximum capacity of cement depots is 1 million tons. On top of that, hoarding is not possible given that cement is being offered on Iran Mercantile Exchange. The smallest consignment of cement, i.e., 10 tons is being sold at IME; there is no need for the middlemen here. Trading is transparent and a ceiling has been set, depending on different companies and cities. So claims about cement being hoarded by some are baseless. Clearly, our problems are chiefly due to power outages,” he added.
Iran was ranked the world’s seventh biggest producer of cement in 2020 by the United States Geological Survey, with an output of 60 million tons.
The ranking is unchanged compared with 2019.
Iran was the world’s eighth biggest cement producer in 2018 with 58 million tons, while Turkey was the seventh biggest producer with 72.5 million tons. However, as Turkey’s production declined in 2019, Iran occupied the seventh place, according to Iranian Mines and Mining Industries Development and Renovation Organization.
The country's cement production capacity is 85 million tons, of which 65 million tons are consumed domestically.
