EghtesadOnline: Mehdi Fekri, a member of the Iran Tile and Ceramic Producers’ Association, says implementation of the government-backed housing development project, the ‘National Housing Initiative’ in addition to the preferential trade agreement with the Eurasian Economic Union is expected to energize tile and ceramic exports this year.
The Roads and Urban Development Ministry has announced plans to build 400,000 homes over two years. Registration for the government-sponsored scheme began on Nov 6 in 10 provinces, according to Financial Tribune.
Construction of 180,000 residential units has already begun and the ministry is conducting province-by-province registration of eligible applicants.
Having been piloted in Kerman Province to find out if the registration process was smooth, the initial registration phase has been launched in Qom, Hamedan, Sistan-Baluchestan, Ardabil and Zanjan provinces.
Iran's preferential agreement with the EEU took effect on Oct. 27 based on which the two sides are enjoying lower tariff rates in exchanged commodities.
“Despite the (US) sanctions and domestic problems, the tile and ceramic industry is in growth mode thanks to demand in the export markets. Iranian companies can take advantage of the favorable market conditions. There are 147 tile and ceramic factories in Iran with annual output around 300-400 million square meters,” Fekri added.
The industry, he said, is not facing serious challenges regarding raw materials.
"Companies have several venues to meet their needs for clay minerals. Ceramic glaze, which used to be imported, is also produced domestically. Ceramic glaze accounts for between 60-70% of the production cost of tiles and ceramic. Our factories prefer to use high-quality glaze produced at home instead of imported material," he was quoted as saying by IRNA.
According to data published by the Ministry of Industries, Mining and Trade, Iran manufactured a total of 265 million square meters of tiles and ceramics in the eight months to November 21, 2019, which was up 5.5% compared to the same period in the previous year.
Iran’s tile industry enjoys cheap and abundant energy and raw material resources combined with indigenous expertise going back centuries. Before the recent growth, due to the market recession caused by stagnation in the construction sector as well as the tile and ceramic industry’s overproduction (due to the unrestrained issuance of permits in the 1990s), production and exports had declined in the past few years as growth in domestic demand weakened.
Annual production capacity of the tile and ceramic industry is said to be close to 700 million square meters
Overproduction came on the heels of after companies enjoyed a seven-year boom thanks to the controversial state-owned Mehr Housing Plan, which was initiated in 2007 by the previous administration with the aim of providing homes to two million low-income households through free land and cheap credit.
The plan, however, slowed down due to the lack of funding, which dragged down domestic demand for construction materials. When the domestic market slumped, producers turned to exports.
Iraq, Afghanistan, Pakistan, Turkmenistan, Georgia, the UAE, Tajikistan, Armenia, Uzbekistan and Azerbaijan are buyers of Iranian tiles.
Iran’s tile producers have to compete with foreign rivals, especially the Chinese, with much lower production costs and considerably higher economies of scale.
Accounting for half the domestic production of tiles and ceramics, Yazd Province is the production hub of this sector in Iran, according to deputy head of Iran’s Tile and Ceramics Association, Nasrollah Sharif-Fard.