The secretary of the Iranian Cement Industry Employers Association stated that the supply of cement in the commodity exchange guarantees the rights of producers and consumers. It seems that the government is seriously pursuing the mechanism of supplying cement in the commodity exchange. This scheme is very useful though. But it should be noted that the cost of cement for the housing supply chain is very small. The government must address more important issues for price control. In the current situation, due to the exit from the energy crisis, the cement market will automatically come out of inflammation. Therefore, there is no need to mediate this natural achievement. In the following, we will evaluate this issue in more detail. Please be with Artan Press.
*** The role of the Ministry of Silence in the cement supply mechanism in the commodity exchange
Abdolreza Sheikhan, emphasizing the strategy and supportive role of the Ministry of Industry in the mechanism of supplying cement in the commodity exchange, considered the obligation to present this commodity only in the commodity exchange as a right decision. He believes that this decision protects the rights of producers and consumers. He said: “From the beginning of this year, with the follow-ups and consultations carried out and the approval of the Ministry of Industry, cement factories and production units gradually entered the cement supply mechanism in the commodity exchange.” He told reporters that due to the transparency in prices, by doing so, the desire of production units to present their products on the commodity exchange increased. At present, about 85% of cement production units offer their products on the commodity exchange.
*** Requiring cement producers to be active in the commodity exchange
Abdolreza Sheikhan called the requirement of production units to offer their products on the commodity exchange a right decision. At the same time, he added: the supply of a part of cement in the stock market causes the product to become more expensive and to be exploited by profiteers and brokers.
The cement market, which is one of the most important construction materials, has witnessed huge unrest in Iran in the past three months. This inflammation is unprecedented in the history of production and consumption of this product. It seems that the cement supply mechanism in the stock market should have been implemented much sooner. At the moment, this may not be a big achievement with the pressure on the market.
*** Analysis of the price gap in the cement market
But it is not bad to examine the analysis of the cement price gap over time. The price of cement, which was 2.2 million rials (about $ 52.3) per ton at the beginning of this year (late March). In less than three months, it decreased to 1.2 million rials (about $ 28.5). The closure of ready-mixed concrete plants and the cessation of pouring concrete in construction projects worsened the production situation.
These closures continue. But it seems that the government has put some of its inventory in Anbar on the market. The proposal of a cement supply mechanism in the stock exchange has also caused serious fear to brokers and warehousemen in this field. We are gradually moving away from the construction season. On the other hand, the electricity crisis has been resolved. Therefore, there is no reason for the lack of cement in the market. Of course, considering this as an executive achievement is debatable.
*** The role of cement supply mechanism in raw material pricing
It is said that the reason for these conditions in the housing and construction market is the cement supply mechanism of the Iran Commodity Exchange. An issue that sparked much debate. Some experts as well as activists in the cement market have opinions. They believe that conventional cement pricing has always challenged producers. Therefore, this product is offered in the commodity exchange.
Gholamreza Shariati, a member of the parliament’s development commission, is one of those who support the idea. He says cement is one of the basic commodities that should be offered on the commodity exchange. This product should get rid of government pricing. Market surveillance should replace dictatorial intervention in commodity price trends. He believes that it is possible to achieve transparency in transactions with the mechanism of supplying cement in the stock exchange.
*** Transparency; Achilles heel opponents of the cement supply mechanism in the stock market
“Some profiteers who suffer from the transparency of the cement trading process are looking to create chaos in the market,” he said, referring to opposition to offering cement on the commodity exchange. Alireza Asgari Marani, a capital market expert, is another person who supports the idea of providing cement in IME. In a recent article entitled “Why does the supply of cement in the commodity exchange help the national economy?”.
“Since last year, due to the structuring that was done in some large cement units, more oversight of the sales and cash sales cycle has gradually begun,” says the expert. It seems that the cement supply mechanism in the commodity exchange will answer many problems. And then, with the continued entry of a number of products of those companies in the commodity exchange, it makes the market transparent of this national product, which has a GDP value of over five billion dollars.
*** Price fluctuations by rent-seekers in the last three months
The cement market has gradually developed a path that can take a leap forward in production by rebuilding existing units to increase capacity and a semi-finished development program. However, unfair power outages in this industry and the steel industry, without observing fairness compared to other industries, stopped the production of this product and as a result disrupted the supply and demand mechanism in high consumption seasons (spring and summer).
The excuse of shortage and price increase was provided by the permanent rent-seekers of this strategic commodity so that they could continue their corruption and rent-seeking by appearing in the corridors of the Ministry of Industry and Mines and chanting deceptive slogans. But it seems that the cement supply mechanism in the stock market will complete this path forever.
*** Opponents of the cement supply mechanism in the commodity exchange
On the other hand, there are those who oppose the supply of cement in the commodity exchange. They say that the beginning of this strange crisis in the cement market was the arbitrary decision of cement factories to change the pattern of sales and registration of cement in the commodity exchange. According to the Minister of Transport and Urban Development, the decision was taken and implemented without observing the laws and regulations of the country, despite the opposition of this ministry and even the market regulation headquarters, and the situation has returned to its previous state. According to the opponents of the cement supply mechanism in the stock market, this route cannot lead to the discovery of the real price.
A cement distributor in Tehran also criticizes the cement supply mechanism on the stock exchange, saying: “Under no circumstances can ordinary people enter the stock market. It seems that the capital market is not a place for the end consumer. Capital The big investors buy the cement production line together and then sell it to us at several times the price, and only if we get a chance and the goods reach us can we hope to buy cement. They compare the product with other products that have had this experience.
*** Definitive elimination of intermediaries in case of offers on the stock exchange
Such opponents say, however, that the mechanism for supplying cement and steel to the commodity exchange could help producers, housing developers and buyers by eliminating intermediaries. But this scenario is still worrying. Meanwhile, one of the current problems is the supply of half and half of cement in the stock market, where some of the cement enters the stock market and others are sold directly. This causes the market of this product to be affected by stock market rates and causes price distortions.
*** Legal opponents of the supply of cement in the stock market
The Stock Exchange and Securities Organization has announced that all companies are obliged to list all their products on the stock exchange. The cement supply mechanism has also been operated based on this decree. Meanwhile, the Ministry of Transport and Urban Development and the Standards Organization are opposed to offering cement on the stock exchange. It is said that the entry of cement into the stock market has been adopted and implemented without observing the laws and regulations of the country. These ministries believe that this complicates the conditions for the purchase and supply of cement.
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