Robust growth on Iraq’s construction sector, positively influenced by the country’s reconstruction and rehabilitation program, with a total investment exceeding USD 94 billion over the coming decade, is expected to continue to drive cement demand in the country, according to the 2021 update of the Iraq Cement Market & Forecast Report.
Iraq’s cement demand is expected to increase to an estimated 28 million tons between 2021 and 2026, while capacity is set to increase by over 6 million tons in the same period. Even though the country is expected to add new capacity, cement ex-clinker imports are also forecast to witness a slight increase by 2026, with illegal imports from Iran continuing to be a factor, especially in the border areas.
“The Iraqi cement market is bound to experience steady demand growth as a consequence of continuous GDP growth which remains linked to international crude prices. Global economic recovery driving demand for crude oil is expected to result in robust public and private investments in the construction sector. The increase in demand is expected to be catered by existing domestic players as well as by imports from Iraq’s neighbors,” states Prashant Singh, Associate Director at CW Group.
Cement demand to grow on robust infrastructure investment
In the next five years, Iraqi cement demand is forecast to expand as a result of investment, mostly directed towards the reconstruction program. The Iraqi government under its 2018-2022 plan requires more than USD 150 billion, focused mainly on reconstruction and rehabilitation. The government intends to fund around 60 percent and seeks the remaining from the private sector, including international donors.
After a major transformation in the cement trade, since the official ban on Iranian cement imports, implemented in May 2019, official trade statistics showed that cement imports ex-clinker declined from over 3 million tons in 2016, predominantly from Iran and Turkey, to just over 0.1 million tons in 2020. However, It is expected that imports will see an increase over the forecast period as relations normalize.
Cement production capacity likely to increase along with utilization rates
Despite having a capacity surplus of more than 20 million tons, the cement industry in Iraq is expected to see utilization rates increase to more than 54 percent in 2026, to cater new projects like the Baghdad Metro and the Al Rasheed Housing project.
Production levels have been improving over the past years as a result of the Iraqi authorities’ commitment to support the recovery of the cement industry, especially by partnering with the private sector.
Ex-works and retail prices forecast to decline this year
Cement ex-work prices are expected to decline in 2021 by almost 21 percent after a sharp and unexpected increase of 36 percent year-on-year in 2020 due to the depreciation of the Iraqi currency. Over the past five years, retail prices have mirrored to a great extent the pattern in ex-works pricing, and retail prices in 2021 are also expected to decline.
Meanwhile, Iraqi import cement prices have been relatively stable, except when there was a sharp increase in 2019 following the ban on Iranian cement, are expected to revert back this year to levels prior to that of 2020.
The Iraq Cement Market & Forecast Report provides qualitative and in-depth market assessment and forecast of the country's cement industry, including cement volume trends in detail, trade flows, cement demand and production (historical and a five-year outlook), per capita consumption, and the competitive landscape. The report also comprises key players profiles, cement production facility details, including past and announced brownfield production increases and greenfield projects. Find out more about the report here.