Economy, Domestic Economy

The Woebegone Ceramic Industry

The Woebegone Ceramic IndustryThe Woebegone Ceramic Industry

Iran’s ceramic and tile industry is hit by overcapacity due to the unrestrained issuance of factory construction permits during the 90s.

Iranian factories currently have an annual capacity of 700 million square meters while a huge surplus of tiles and ceramic is gathering dust in their storehouses, Forsat-e Emrooz daily reported.

Domestic consumption has been seriously affected by an unprecedented downturn in the housing sector over the past two years, which has led to a major decline in demand.

The export markets have also been adversely affected by the regional crises and a sharp decline in oil prices.

Ceramic factories are currently operating at a fraction of their production capacity due to the reduction in exports to Iraq that has traditionally been the main market for Iranian ceramic and tiles.

Mahyar Esfahani, the production manager of a ceramic company, said the excessive stockpile of tiles and ceramic at factories or distributors’ storehouses is enough to meet domestic need for a year since there is no export market.

“Apart from neighboring countries, Iran exported 200 million square meters of ceramic to Russia and Nigeria last year,” he said.

Statistics released by the Tile and Ceramic Producers Association show the export of 120 million square meters of ceramics generated $500 million in revenues for the country in the last Iranian year (ended March 20, 2015).

Ceramic producers are also facing difficulties in keeping their production costs competitive.  “The costs of transportation and fuel have imposed a heavy burden on producers. For instance, lack of efficient rail and road transport is a major hurdle in the way of exports to target market,” Esfahani added.