Cement Stocks Rise on News of Demand Stimulation

Iran is currently the world’s seventh largest cement producer

Cement stocks have posted gains following the Cabinet’s decision to provide financial resources for purchasing part of the industry’s excess output, and the parliament’s approval for renovation of rural areas.

Tehran Stock Exchange’s cement index rose 13.20 points or 1.85% on Monday to reach 725.70 after it suffered two days of consecutive losses and was struggling to budge for the past month.

The purchase proposition had been in the making for quite some time. The Ministry of Roads and Urban Development announced back in August that it planned to boost domestic demand for the industrial material by purchasing up to 2 million tons of the excess output.

The required financial facilities will be provided by Bank Maskan by issuing letters of credit.

According to Roads and Urban Development Minister Abbas Akhoundi, the industrial material will be used in the construction of runways, roads and buildings.

In a Sunday Cabinet meeting, President Hassan Rouhani tasked Interior Minister Abdolreza Rahmani-Fazli to identify Tehran City’s time-worn buildings and take measures to upgrade their safety standards, Bourse Press reported.

The measure is expected to further boost local demand for cement. The decision was taken in the wake of the devastating collapse of Tehran’s Plasco building last week. The 17-floor commercial high-rise burned down on Thursday.

Several people have been confirmed dead; many more are still missing. Plasco was built in the 1960s.

Majlis Development Commission has identified 10,000 rural areas for renovation, which is expected to create a 12-million-ton demand for cement.

Iran’s cement industry is currently in hot waters, as faltering domestic demand and loss of export destinations have caused tons of cement to be piled up in warehouses. Plants, though operating at minimum capacity, have a hard time marketing their products.

Iran is currently the world’s seventh largest cement producer, as it dropped three steps last year due to its plummeting production. Production reached 58.6 million tons in 2015, down 12% year-on-year, according to CEA data.