At least 300 million square meters of ceramic tiles are piled up at factories or in distributors’ storehouses, as the manufacturers face shortage of demand in both domestic and foreign markets, Eghtesad News reported.
The low demand for ceramic tiles has placed a heavy burden on manufacturers, with a considerable amount of their working capital stuck in the warehouses.
Consumption has been seriously affected by an unprecedented downturn in the housing sector over the past two years, which has led to a 30% decline in domestic demand for ceramic tiles since the beginning of the current Iranian year (started March 21) compared with the same period of previous year.
The manufacturers are now concerned that they will be forced to reduce production or lay off employees if demand continues to fall. They are also faced with difficulties in keeping production costs competitive, as labor and utility costs have increased in recent months.
Ceramic tile production currently stands at three times the demand in domestic market while export markets have also been negatively affected by the regional crises and a sharp decline in oil prices. Tile factories are currently operating at less than 70% of their production capacity mainly caused by the reduction in exports to Iraq, which accounts for about 80% of Iran’s export market. Tile export to the Arab country declined by at least 10-15% in the past Iranian year over its previous year.
Another problem faced by the tile industry is restrictions in monetary transactions caused by western sanctions against Iran over its nuclear energy program. The manufacturers are unable to receive the money for their exported products even as they are in dire need of importing machinery, equipment and raw material.
The huge surplus of ceramic tiles forced the Iranian Ceramic Producers Syndicate to order tile factories to shut down for 45 days from March 6 to help the factories sell their piled up products.
