Iranian ceramic industry sees slowdown

The Iranian tile industry has experienced strong growth over the last 10 years. The use of more modern technologies has raised production capacity and improved product quality, opening up opportunities for exports.

According to the Iranian Ministry of Industry, total installed production capacity currently stands at around 700 million sq.m/year, with around 133 manufacturing units in operation (out of 170 existing facilities). More than half of these are located in the Yazd district and the others are spread out across the country.

According to the Iranian Ceramic Syndicate, domestic tile consumption started to decline in 2012-2013, while local tile production remained high, also boosted by the increase in exports, mostly to Iraq.

This was followed in 2014 by a sharp and sudden decline in the tile industry and market, in line with the performance of the construction industry and the burst of the housing bubble. Domestic sales plummeted by 43% from 350 to 200 million sq.m, exports fell slightly to 110 million sq.m (-3.5%), and although output dropped by 18% from 500 to 410 million sq.m it remained well above demand. As a result, stocks reached 100 million sq.m in 2014.

From the production figures for the first quarter of 2015 and the analysis of domestic and export market trends, it appears possible that output volumes and domestic consumption may experience a further decline in the current year. A recovery in exports is even more likely (they are estimated at about 120 million sq.m. in 2015) following strong progress in the first quarter of this year in Iraq, Afghanistan and some markets in the CIS area. Export growth appears to be the only short-term solution for overcoming the crisis.