Iran accounted for 25% of oil reserves in the Middle East and 12% of the world in 2020. Its crude oil production reached a 30-year low in 2020 due to the global Covid-19 pandemic.
The country's economy contracted by 7% and the construction industry was adversely impacted due to a shortage of labor and raw material, according to a new report released by Research and Markets titled "Iran Construction Equipment Market - Strategic Assessment and Forecast 2022-28".
In 2022, the Iranian government announced 48 industrial and infrastructure projects worth about $19 billion to uplift the economy post-pandemic. The Iranian government aims to complete over 3,900 km of new railroads and roads by March 2022 to boost economic activities and increase investments in energy, oil and gas, petrochemicals, infrastructure and industrial sectors.
Iran witnessed an investment of $78.9 million in 2021 to improve roads, railroad network and construction of welfare service complexes.
In 2022, 390 infrastructure development projects will be inaugurated in the country's industrial parks and zones. Iran's government has also announced 48 industrial and infrastructure projects worth $19 billion. Thirty-one power plants with a capacity of 15,000 MW have started across the country; so far, 3,150 MW have been put into operation.
In 2021, the Iranian government commenced the construction of the 1,400-MW Hormozgan power plant project.
Iran's government also announced 48 industrial and infrastructure projects worth about $19 billion in 2021 to overcome the negative impact of the pandemic. These projects included 30 development projects in Imam Khomeini, Bushehr, Genaveh, Chabahar, Shahid Rajaee and Anzali ports, with about $269.4 million.
The government has planned to invest $78.9 million in upgrading the transport infrastructure. Also, $12.2 million were allocated for enhancing the aviation sector, including the development of flight levels and airports of Bandar Abbas, Zahedan, Saravan and Khorramabad.
In 2021, the head of Iranian Mines and Mining Industries Development and Renovation Organization announced that 29 projects in mines and mining industries are ready for inauguration across the country.
Iran Minerals Production and Supply Company also announced that its organization will inaugurate 23 development projects in mines and mining industries worth $355 million in 2021.
Slow Recovery of Manufacturing Industry
Iran's economy is relatively diversified compared to many other Middle Eastern countries, but it still relies heavily on petroleum and other liquid revenues.
In 2019, Iran earned $30 billion in net oil export revenues, down from $66 billion in 2018. Export revenues fell in 2019 after US sanctions were imposed on Iran's oil exports, resulting in a decrease in crude oil production and exports in Iran.
The economic fallout from the Covid-19 pandemic, including lockdowns and mobility restrictions, resulted in Iran's crude oil production dipping below 2 million barrels per day in 2020.
Iran's proposed licensing ban and divestment strategy are ending support for fossil fuel production. The decision to control fossil fuel exploration could directly impact demand for construction equipment such as excavators, cranes, tower cranes, mobile cranes, etc., in the oil and gas industry.
The country's manufacturing industry has underperformed since 2019. The primary reason for its low manufacturing productivity is its dependency on raw materials from neighboring countries. The outbreak of the Covid-19 pandemic has disrupted the supply chain and the Iran manufacturing industry witnessed a decline in 2020.
The rising investment in road construction triggers demand for low-maintenance, flexible equipment. For instance, CASE construction Equipment delivered a fleet of equipment, including road rollers, motor graders and backhoe loaders, in 2022.
Major OEMs in the country are expected to follow the recent trends in demand for construction equipment and focus on delivering fuel-efficient and low maintenance equipment such as backhoe loaders, skid loaders and mini excavators in the Iranian market.
With the Internet of Things, the performance of excavators is expected to improve and offer access to more data.
Key Insights of Iran’s Construction Equipment Market
The material handling equipment has the largest share in Iran compared to earthmoving and road construction equipment.
Government investment in road construction, infrastructure development, housing projects, smart cities and the development of eastern and southern corridors will positively impact demand for material handling equipment in the Iranian market.
The demand for equipment financing has increased post-pandemic to avoid project delays due to funding challenges. Overwhelmed by the funding challenge, OEMs such as Komatsu, Caterpillar, SANY and Hitachi construction machinery provided financial assistance to customers.
In 2021, there was a surge in equipment financing activities by OEMs in Iran. OEMs are focusing on maximizing benefits from the spike in demand for construction equipment in the country caused by the rise in infrastructure projects.
Other major players, such as XCMG, Zoomlion, Kobelco and Hyundai Construction Equipment, expect to follow a similar trend.
