Iran deal likely to bite Pakistan’s cement exports

KARACHI: The lifting of western sanctions on Iran may cut the share of Pakistani cements in the international market as it is likely to give a boost to Iranian cement exports, analysts said on Wednesday.
Analyst Zeeshan Afzal at Taurus Securities said once Iran starts cement export through official channels Pakistani cement makers may face some challenges in Afghanistan market.
“Currently, Iran is exporting its cements to Afghanistan and Balochistan through informal channels, creating competition for Pakistani cement players,” Afzal said.
Iran reached an agreement with the six world powers to limit its nuclear activity in exchange for lifting of 12-year old international economic sanctions on the country.
Iran is the world’s 4th largest cement manufacturer with an annual production of around 66 million tons, which is likely to further rise in one to two years.
Citing cement industry in the north zone, Afzal said they believe that the Pakistani cement exports to central Asian region may be affected after the lifting of sanctions.
Iranian cement will eventually penetrate central Asian countries, he said.
Pakistan exports around three million tons of cement to Afghanistan, which is nearly half of its total cement exports of 7.1 million tons/year. The country annually ships 0.5 million tons of cements to central Asian countries.
Cement markers said Pakistani cement export to Afghanistan has already dropped 36 percent due to cheap Iranian cement.
Various estimates said 0.3-0.5 million tons of cement is dumped into Pakistan due to its price competitiveness.
The entry of Iran in international market has already started spooking global cement suppliers
“Once legal trade begins, Iran may divert sales to more profitable zones,” said Sadiq Samin, securities analyst.
However, some analysts don’t see any impact, foreseeing an upsurge of economic activities in Iran, which will increase the commodity’s intake in its local market. They said the rise in Iran’s currency value will render its exports uncompetitive.