Economy, Business And Markets

Cement Exports to Be Regulated

Cement Exports to Be Regulated
Cement Exports to Be Regulated

The Iranian Cement Industry Association is sending a proposal to the ministry of industry, mine and trade seeking to put an end to cement exports through channels other than the Iran Mercantile Exchange, SENA reported Saturday, citing the association’s secretary, Abdoreza Sheikhan.

Cement producers have recently been mulling over entering the IME hoping that the market can better regulate cement prices for export purposes, Sheikhan said, noting that the ministry should make a final decision on the matter.

“It has always been an issue for those involved in the industry to come up with a fixed rate for cement export,” Sheikhan added.

“The cement industry struggles with lack of transparency when it comes to pricing,” a cement market analyst in Tehran told Financial Tribune on Saturday. “Brokers have a key role in this business and have made producers deal with them at low prices,” Neda Ghanbari noted.

The industry is already in recession and the market is oversupplied.

Brokers have now grabbed this opportunity to offer low prices for cement, Ghanbari added. “As the export policy is not clear in this industry, brokers try to cut prices to the lowest level, even based on the official foreign exchange rate, which is hovering around 26,700 rials. In other industries, price is calculated based on free market rate, which is currently hovering around 32,600 rials.”

If cement is traded through the IME only, its price will be regulated in a transparent way and brokers would be kept away in the pricing process, Sheikhan noted. “This brings stability to the cement market.”

However, critics say not all cement traders are seeking to enter the exchange market as prices could be fixed at even lower rates.

Proponents of the proposal argue that should cement be traded in the exchange markets in Tehran and Kish Island, a boom in both production and exports could be expected.