Cement Produces Obliged to Sell Only via the IME

EghtesadOnline: Cement factories are compelled to sell their products only via the Iran Mercantile Exchange, a deputy industries minister said.

News ID: ۷۸۶۹۴۳

04 September 2021

“All [wholesale] cement trade outside the IME will henceforth be prohibited and producers must offer their products at the IME,”Asadollah Keshavarz was quoted as saying by the Securities and Exchange News Agency.

The Industries Ministry has given two weeks to cement companies to obtain trading codes to be able to trade at the IME.

In addition, all related businesses that use cement as raw material, such as concrete makers, as well as mass construction companies and sales agents, will have to observe the same deadline as they are required to purchase their cement via the IME.

“A total of 76 cement companies operate across the country. Sixty are already listed and the remaining 10 have to receive trading codes,” Hamid Farmani, a member of the Cement Manufacturers Association, told state TV.

“Producers who fail to abide by the two-week deadline, will face restrictions,” the guild official said without elaboration.

IME is a commodities exchange in Tehran founded in 2006 to host deals in farm, industrial and petrochemical products in the spot and futures markets.

Cement topped the list of commodity trade with 2.43 million tons in the last calendar month ending August 21. The figure was substantially higher compared to the month before when 252,000 tons was sold.

Cement prices have seen unprecedented rise in the past few months. It sold for 2.2 million rials per ton in the beginning of current fiscal year (March) before jumping to 12 million rials per ton in July, disrupting construction activity.  The temporary upsurge began when the Industries Ministry decided to offer cement at the IME for the first time.

To make a bad situation worse, most cement factories were forced to shut down or cut production due to widespread power outages.

With the mercury rising in mid-July, the Iran Power Generation, Distribution and Transmission Company (Tavanir) restricted  power supply to cement and steel producers.

The government allowed cement and steel factories to operate at 30% capacity during the day and at 100% capacity from 12:00 midnight to 8:00 am.

Widespread cement shortages brought civil development projects, including freeway construction projects and the government-sponsored affordable housing project — the so-called National Housing Initiative, to an abrupt halt.

Iran was ranked the world’s seventh biggest producer of cement in 2020 by the United States Geological Survey, with an output of 60 million tons. The ranking was unchanged compared with 2019.

Cement production capacity is 85 million tons of which 65 million tons are consumed domestically.