Iran’s Tiles, Ceramics Exports to Pakistan Reach $20 Million

Morad Nemati Zargaran also estimated that the export value will reach $30 million by the end of the current fiscal year (March 20, 2018) to register a 50% growth compared to last year, IRNA reported.

“Tiles and ceramics are Iran’s second most exported commodity to Pakistan after bitumen and oil,” he added.

Iran’s last year exports of tiles and ceramics to the neighboring country stood at $22 million, Financial Tribune reported.

According to Zargaran, Pakistan’s demand for tiles and ceramics stands at 100 million square meters per year, of which only 20 million square meters are produced domestically.

Exports to Pakistan come as Iran’s ceramics and tiles industry is hit by recession.

Chairman of Iran Ceramic Producers Syndicate Behnam Aziz-Zadeh said back in February more than 150 million square meters of tiles and ceramics in excess of demand were piled up in warehouses across the country.

“Local producers are operating at less than half their production capacity,” he said.

According to the official, the two main factors causing the market recession include the ongoing stagnation in the construction sector as well as the ceramic and tile industry’s overproduction due to unrestrained issuance of factory licenses during the 1990s.

Iran’s tile industry enjoys cheap and abundant energy and raw material resources combined with indigenous expertise rooted in history. However, due to the above-mentioned problems, production and exports have followed a downward trend for the past few years and growth in domestic demand has been weak.

Latest available data show Iranian producers manufactured 400 million square meters of tiles and exported 54 million square meters during the fiscal 2015-16, registering a 16% and 17% decline in volume and value respectively compared to the preceding year.

Domestic tile consumption shrank by 15% and stood at 335 million square meters that year.

Iran was the world’s sixth largest producer and fourth major exporter of tiles in 2014.

The overproduction in the industry came about after Iranian producers experienced a seven-year boom owing to the controversial state project Mehr Housing Plan, which was initiated in 2007 by the previous administration with the aim of providing two million low-income people with housing units through free land and cheap credit.

The plan, however, slowed down due to lack of funding, which dragged down domestic demand for construction materials in the process.

In the face of the slump in the domestic market, producers have turned to exports.   Iraq was the biggest export destination for Iranian tiles in 2014, as it accounted for 76% of total exports and attracted 84.6 million square meters of the commodity worth more than $320 million.

Afghanistan, Pakistan, Turkmenistan, Georgia, the UAE, Tajikistan, Armenia, Uzbekistan and Azerbaijan were other buyers of Iranian tiles.

Iranian tile producers have to compete with foreign producers, especially the Chinese, with much lower production costs and considerably higher economies of scale.