Economy, Business And Markets

Plan to Suspend Cement Production for 2 Months

Plan to Suspend Cement Production for 2 MonthsPlan to Suspend Cement Production for 2 Months

Negotiations are underway with cement factories to stop production for the first two months of winter (Dec. 22–Feb. 19), a member of the board of directors of Cement Industry’s Employers Association said.

Ahmadreza Omranifard added that currently more than 18 million tons of cement valued at about $29.4 million are stored in warehouses due to shrinking demand.

“Considering the current condition of the cement industry, the proposed two-month hiatus in production will not affect Iranian cement’s standing in domestic and foreign markets,” ISNA quoted Omranifard as saying.

The cement industry has hit a rough patch as demand in Iraq, which used to be the main export destination for Iranian cement, has been waning due to the neighboring country’s unstable condition and plummeting oil prices.

“Some producers are flooding the Iraqi market with cheap cement. Consequently, Iraq increased import tariffs on Iranian cement to support its domestic producers,” he said.

Furthermore, Iran’s cement exports to other destinations in the region such as Azerbaijan have also dropped due to higher import tariffs and tough competition from other cement producing countries.

“The slump in Iran’s construction sector has brought about a 12% decrease in average cement consumption compared to the previous Iranian year (March 2014-15),” he said.

According to Omranifard, cement producers are currently exporting clinker–the raw material used in the first stage of cement manufacturing.

“Iraqis have recently established various cement mills and turned towards importing clinker and producing their own cement,” he said, adding that the manufacture of clinker accounts for close to 85% of the total cement production costs.

Iran was the world’s biggest exporter of cement last year with the shipment of 19 million tons. In terms of production, the country ranks first in the Middle East and fourth in the world. Last year’s output stood at 75 million tons.