Turmoil in the Building Materials Market
Cement Prices Under Pressure from Fuel Costs; Association Secretary Reports Doubling of Production Costs
- Continuous use of mazut in cement factories since the beginning of the year
- Gas restrictions persist even in the warm season, with potential continuation into autumn
- Cement production costs double due to mazut transportation costs
- Tehran Cement and white cement factories are banned from using mazut due to quality concerns
According to SAMA, the Secretary of the Cement Association has reported a significant increase in cement production costs due to the use of mazut (heavy fuel oil), stating: “Cement factories are forced to use mazut even during the warm season, and the cost of transporting it has increased cement production costs by up to two times.”
Ali-Akbar Alvandian, Secretary of the Cement Association, commented on the fuel supply situation for the cement industry in winter: “This year, due to the circumstances that have arisen, we have faced gas restrictions since the beginning of the year and have been continuously using mazut.”
He added: “We are trying to build up reserves so that we can manage gas consumption, but in any case, the country’s macro-management decisions have led us to continue using mazut, with only a very limited amount of gas available to us.”
Alvandian clarified: “The amount of gas we receive is very limited, and even during the warm season, we are still using mazut. It is not yet clear what conditions will be like in the autumn. Last year, gas restrictions began in mid-October (Mehr month in the Iranian calendar), and this year, given that we have gas restrictions even in the warm season, the use of mazut will naturally continue.”
Problems for Units Unable to Use Mazut
The Secretary of the Cement Association, referring to the dual-fuel capability of factories, said: “Cement factories have dual-fuel capability, but in some units, such as Tehran Cement, which has a ban on mazut use, and white cement factories, due to the effect of mazut on product quality, it is not possible to use mazut, and they must use gas because a reduction in quality could lead to the loss of domestic and export markets.”
Impact of Fuel Costs on Final Prices
Alvandian, referring to the costs imposed on the cement industry as a result of mazut consumption, stated: “One of the important points is the cost that mazut consumption imposes on the cement industry. When we use mazut instead of gas, the cost of transporting mazut is very high, and on average across the country, it effectively adds nearly the price of the fuel itself to costs; therefore, the industry is effectively paying about twice as much.”
