Iran’s cement market will stabilise

A senior cement industry official expressed hope that the cement market will return to normal following plans to establish new mills and the much-anticipated decline in demand with the approach of winter. Alireza Sharafi, head of Mining Development and Renovation Organization’s Cement Affairs Department, told ILNA that cement is considered a strategic sector in the development drive, stressing that the government has thus always been concerned about the pricing mechanisms.

He said that excessive cement prices are rooted chiefly in poor private sector investments and higher than expected demand levels.

“Our hope is that with the end of construction season in winter, the demand for cement will decline and this will lead to a fall in prices” he said, adding that new production units, including Kavir Kashan cement project with an annual production capacity of 1.5Mt, will become operational in the near future.

The Commerce Ministry is also planning to submit a comprehensive plan to the Ahmadinejad administration seeking the removal of cement from the list of items subsidised by the state. The new plan will try to regulate market prices and create greater competition among production units.

It will also seek to rectify the government’s earlier initiative to allocate subsidies for cement industry. Cement companies have suffered a hefty 43% decline in share prices over the past 20 months. The 25 cement companies listed on the stock market produce 90% of Iran’s cement. Cement consumption has grown by 31 per cent from 20.2Mt in 1999 to 31.5Mt in 2004. This figure is expected to exceed 33Mt this year.