“The 12% increase pertains to different types of cement products,” Deputy Minister Jafar Sarqeini said. “Market prices in recent years have been 20-30% cheaper than the government rate as supply has overtaken demand.”
The official noted that the increase is meant to make up for the fixed prices in the last two fiscal years (March 2016-18), according to Financial Tribune.
The move was welcomed by Mohammad Atabak, the head of Cement Employers Association, who called it a necessary measure considering the “significant hike in production costs and the industry’s condition”.
Iran produced 54.5 million tons of cement and 57.9 million tons of clinker in the last fiscal year (ended March 20, 2018). Over 49 million tons of cement were supplied to the local market and about 6 million tons were sold overseas, IRNA reported.
This is while the industry boasts an output capacity of about 90 million tons, slightly over half of which is consumed in the local market and the rest is a surplus. Exports in recent years have reached a maximum of 10 million tons in the best-case scenario, according to CEA’s board member, Morteza Lotfi.
Exports are seen as the only way out of stagnation, but Iranian cement exporters have lost their traditional markets such as Iraq and Afghanistan to competitors and their foray into alternative markets such as Africa and Central Asia is yet to recoup the lost shipments.
The industry is consequently stuck between a rock and a hard place, and the recent price increase, which industry officials had long called for, could help them keep their head above water.