Diversification in economics is one of the goals that no expert or expert is opposed to. However, it is not possible to do anything in the field with a letter and without practical support. Recently, I have been trying to write about the barriers and opportunities of the industries and sectors of the country’s economy, which have good capacities and can be a good alternative to oil exports and revenues that have been hit by sanctions. There are many industries in the country that have high growth capacities, but these capacities have not been realized due to internal barriers. Meanwhile, some sectors, such as the automotive industry, have been in a downtrend, which, of course, can be stopped by follow-up efforts. But there are also industries that are growing, but due to the lack of demand from foreign buyers. Iran’s cement industry is part of this industry. The question is, what should be done to these industries with regard to the imbalance of supply and demand?
Most estimates indicate the growth of the country’s cement industry. Last year, we produced more than 70 million tons of cement, which is expected to reach 75 million tons by 2013 and reach 110 million tons by 1394. Iran’s cement exports grew by thirty percent year-on-year in 2012. We are expected to export 18 to 20 million tons of cement this year and outstrip America as the third largest exporter of cement.
But it should not be forgotten that these figures reflect the declining trend of Iranian cement exporters. Unfortunately, we are losing some of the important customers of the country’s cement industry. In June, Iraqi officials announced that they will stop importing Iranian cement after July 10th. Iraq is seeking to expand the cement industry, and in this regard it wants to stop its domestic production by stopping the import of cement from Iran. According to Sadegh Sawadi, vice chairman of the Union of Cement Exporters of Khuzestan, Iraqi officials have stated that political and security factors are among the reasons for stopping imports of Iranian cement. We exported 16 and 1.5 million tons of cement last year to 24 countries. At the same time, Iraq imported half of Iran’s 20-30 thousand tons of cement from Iran daily. In addition to Iraq, the Republic of Turkmenistan has announced that it wants to stop the export of Iranian cement. Turkmenistan, with 7% share of Iran’s cement exports, is the third largest importer of this product from our country.
In order to maintain the current production of cement and expand the industry, we need to find new customers. Obviously, the existence of international sanctions makes it harder, but perhaps a bigger challenge is to blur Iran’s relations with the countries of the region. It should be noted that the cost of transportation of cement is high and therefore the product can only be transported to areas close to the country. Therefore, the regional impact on cement exports should not be underestimated. Now the Syrian crisis has tensions in regional affairs and has found difficulty finding new customers in the neighborhoods of the country.
This situation may have long-term effects on the country’s cement industry. Meanwhile, domestic demand for cement is decreasing and is now lower than the domestic production of this product. The cement industry will face surpluses, with no foreign buyers replacing the countries of Iraq and Turkmenistan. This will reduce the price of cement and reduce its revenue. Such a situation will ultimately lead to the loss of cement plants in the country. But one should not forget that cement surplus reduction is not an issue. The fact is that in the long run we have damaged the cement industry if we deliberately lower the cement production to reduce the surplus of this sector. This will put the cement industry in a position where even after removing sanctions and attracting enough customers, there will be no way to restore high production capacity.
Challenges in the country’s cement industry indicate the risk of relying on a limited number of exports. When losing external customers, it will be very difficult to find new customers and partners. Even the industries that have expanded despite the sanctions are also not safe.