“Each ton of ex-works type 2 bulk cement will be priced at 1,200,000 rials ($31.57) VAT-free this year,” Abdolreza Sheikhan added.
The new price has been set by CEA, Consumers and Producers Protection Organization and the Ministry of Industries, Mining and Trade.
“Cement has been offered at a discount for the past two years due to oversupply and recession in the construction sector,” he was quoted as saying by Bourse Press.
According to Financial Tribune, he noted that domestic production capacity stood at about 80 million tons, while actual demand was considerably lower. Subsequently, producers were forced to lower prices to find buyers.
Discounts were removed in the last fiscal year (March 2016-17), but government officials opposed any price increase to keep the market stable.
According to Sheikhan, the domestic cement industry is currently operating at 75% of its production capacity.
The industry is in hot waters. Faltering domestic demand and loss of key export destinations such as Iraq and Azerbaijan have caused tons of cement to pile up in warehouses.
In early 2015, the Iraqi government banned the import of Iranian cement, citing low quality and a drive to boost local production, which deprived Iranian producers of their most lucrative market.
Cement producers have been exploring alternative export markets ever since. They have recently made inroads into the markets of Tanzania, Egypt, Haiti, Bangladesh and Sri Lanka.
The Ministry of Industries, Mining and Trade has set the target for domestic cement output over the next decade to reach 120 million tons per year. Exports are stipulated to rise 68% to reach 32 million tons per annum.
According to Minister of Industries, Mining and Trade Mohammad Reza Nematzadeh, Iran exported 11.5 million tons of cement during the 11 months of last fiscal year to February 18.
Iran is currently the world’s seventh largest cement producer.