Iranian cement consumption up 30% in January

Iran’s cement market expanded 30.4 per cent YoY to 5.27Mt in January 2024 from 4.04Mt in January 2023, according to the Iranian cement association.

Domestic cement producers manufactured 5.78Mt of cement and 6.21Mt of clinker in the first month of 2024, representing an increase of 33.2 and 31.8 per cent, respectively, when compared with January 2023.

A total of 1.18Mt of cement and clinker was exported in January 2024 with cement exports advancing 63 per cent YoY to 0.44Mt but clinker exports falling 18.7 per cent YoY to 0.74Mt.

Outlook
Despite a plethora of concerns, Iranian domestic cement consumption and exports continue to perform strongly. The cement industry is expected to expand further in 2024, after growing 10.9 per cent YoY in 2023.

Local public works, which account for around two-thirds of cement consumption, and several large infrastructure projects will support demand. The country’s Planning and Budget Organization (PBO) has allocated 3qdn rials (over US$6bn) for construction and infrastructure projects in the next Iranian calendar year, which starts on 20 March. 

However, the risks are weighted to the downside. Inflation remains out of control, with the consumer price index trending at over 40 per cent YoY, limiting household purchasing power and housing affordability. Residential property transactions in Tehran were down 60 per cent YoY in November, according to the latest report from Iran’s real estate transaction registration system.

Rising production costs, including raw materials and wages, as well as unreliable electricity and gas supplies are potential drags on cement production capabilities. While ongoing economic sanctions and the sharp devaluation of the rial will continue to add to imported cost pressures. The Iranian rial has dropped nearly 20 per cent against the US dollar since the start of the year. 

However, such a devaluation is good news for the country’s cement exporters with improving price competitiveness. Continued strong growth in key export markets such India, a main destination for Iranian clinker, will further bolster cement exports in 2024.