Cement producers in South Africa are likely to cheer in the near future, with news that Iranian cement is once again saddening Pakistan. Imports of cement from Iran are said to have slashed Pakistan's local production through mass sales at low prices. Pakistan's own province is an exporter of cement, and the situation is described as "incomprehensible".
The problem is that Iran is doing what Pakistan did to South Africa: selling cement at a lower price than local price. In a further irony, Lucky Cement, a Pakistani cement producer, is suing South Africa over anti-dumping duties.
A report in July 2015 suggested that Pakistan's cement exports would fall by 10-15% from 2016 due to the lifting of economic sanctions against Iran. It is predicted that the lifting of sanctions against Iran will not affect competition in the Afghan market, as the main target market for Iranian producers in Afghanistan is Kandahar.
Despite this, according to the Pakistan Cement Manufacturers Association (APCMA), a whopping 4.73 million tonnes of cement was exported from Pakistan to Afghanistan in fiscal year 2010-2011. Pakistan's cement exports continued to shrink slightly before falling sharply in mid-2013. Overall exports fell by 11.57% to 7.2 million tonnes in the 2014-2015 period. Pakistani exports to Afghanistan may have been hit by the departure of NATO troops to operate a new cement plant in neighboring Tajikistan.
Part of the fight is about taxes. In June 2015, APCMA lobbied the Pakistani government to cut tariffs. These included a 5% federal excise tax and a 17% general sales tax on the retail price of cement. According to an APCMA spokesperson, these taxes add $1.56 per bale of cement. Recently, APCMA has joined forces to oppose increases in export tariffs on cement and import taxes on coal.
Meanwhile, in South Africa, Lucky Cement has begun legal action against South Africa's International Trade Commission (ITAC) for imposing anti-dumping duties. The ITAC temporarily imposed anti-dumping duties ranging from 14.3% to 77.2% on Portland cement originating in or imported from Pakistan for six months from May 15, 2015. The tax is levied on bagged cement. The pakistan-based cement producer defends its actions as complying with the laws of its exporting country. In theory, Iran's exports to Pakistan should be taxed at the same price as Pakistani products.
Once sanctions are lifted, the coastal cement market, where Iranian cement is easy to reach, will become worse. Institutions such as ITAC in countries in the Middle East, South Asia and East Africa should tighten their import policies from now on.
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