Cement Export Declines While That of Clinker Rises

EghtesadOnline: As of March 2018, Iraq used to be the main export destination of Iranian cement, but it is more than a year now since the neighboring country suspended imports of this construction material from Iran.

News ID: ۷۵۱۱۹۶

06 October 2020

“With the help of European countries, Iraqis established cement factories with a production capacity of 40 million tons and no longer need Iran’s cement,” said Hamid Hosseini, a member of Iran-Iraq Chamber of Commerce.

“At first, they increased cement import tariffs and then imposed an occasional ban. As we speak, Iraq is only purchasing clinker from Iran.”

According to Abdolreza Sheikhan, the secretary of Iran's Cement Association, exports of cement saw a 24% decrease over the five months to Aug. 21, which is to blame on the decline in demand from the neighboring countries, particularly Iraq.

“Clinker exports increased by 25% over the period. A total of 3.6 million tons of clinker and 1.85 tons of cement and clinker were exported to Afghanistan, Azerbaijan, Uzbekistan, Armenia, Bangladesh, Pakistan, Somalia and the UAE over the five-month period,” he was quoted as saying by the Persian-language daily Etemad.

A total of 5.84 tons of cement worth about $128 million were exported from Iran to 28 countries during the first four months of the current Iranian year (March 20-July 21), according to the spokesperson of the Islamic Republic of Iran Customs Administration.

“Iraq with 424.74 million, Kuwait with $23.37 million and Afghanistan with $19.54 million were the top three export destinations for Iranian cement,” Rouhollah Latifi was also quoted as saying by Mehr News Agency.

Other customers of the product during the five months under review were India, Russia, Qatar, Kenya, Sri Lanka, Pakistan, Armenia, Turkmenistan, Kazakhstan, Azerbaijan, Bangladesh, China and Oman.

According to Latifi, Iran's production capacity currently stands at 85 million tons while domestic demand amounts to around 65 million tons per year.

Noting that costs associated with the production of clinker are very high for regional countries, so they prefer to import rather than produce the item, Sheikhan said, “Iraq used to account for 30% of Iran’s cement exports. Today, Afghanistan is the main importer of cement from Iran; Afghanistan has to pay between $50-60 per ton for importing cement from Pakistan compared with $25 per ton from Iran, plus transportation and customs charges. Five-month exports of cement to Afghanistan have reached 584,000 tons.”

Referring to the 60% increase in transportation costs since the beginning of the current fiscal year (March 20), he said, “Despite everything the Consumer and Producer Protection Organization throws at us, we were the only industry that did not lay off any employee. I also need to note that each fire brick now costs 4 million rials; last year, it was sold at one-third of this price.”

Sheikhan said the distribution of cement has increased by 18% compared with last year and each ton of cement is priced at 2.2 million rials and a 50-kilogram bag of cement is sold at 133,000 rials.

“The relatively low price of cement compared with other materials has led to a change in the construction of buildings. Steel frames are being replaced by cement frame structures; instead of using bricks, builders opt for cement blocks. At times, lime is even being replaced by cement,” he concluded.

More than 17.5 million tons of cement and clinker were exported from Iran last year (March 2019-20), registering a 32% growth compared with the previous year, according to the head of Cement Employers Association.

“Cement accounted for 6.7 million tons and clinker for 10.8 million tons of the total sum. Our main export destinations over the period were Iraq, Kuwait, the littoral states of the Persian Gulf, China, Bangladesh, India and Central Asian countries,” Sheikhan was quoted as saying by Mizan Online.

“A total of 60.3 million tons of cement and 66 million tons of clinker were produced in Iran last year, showing a 9% and 6.9% rise compared with the year before.”

The official noted that Iran is the world’s sixth biggest exporter of cement chain products.

Iran aims to increase its cement production capacity to 100 million tons by 2021 and to 120 million tons 2025.

Iran was ranked the seventh biggest producer of cement in the world in 2019, with a production of 60 million tons. The country was previously the world’s eighth biggest cement producer with 58 million tons as Turkey was the seventh biggest producer with 72.5 million tons.

However, as Turkey reduced its production in 2019, Iran took the seventh place, Iranian Mines and Mining Industries Development and Renovation Organization reported, citing the United States Geological Survey.