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Iran Petrochemicals Report Q1 2014 - New Market Report

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2013-12-13 10:41:06 - New Energy research report from Business Monitor International is now available from Fast Market Research

The Iranian petrochemicals industry will continue to struggle with over-capacity in spite of predicted economic growth in 2014, due to ongoing international sanctions and slowing demand growth in its main export market, China. Only protectionism will shield the industry from a severe contraction, but there are risks of plant idling, postponement of projects and effective insolvency that will undermine the government's target of reaching a petrochemicals capacity of 100 million tonnes per annum (mn tpa) over the next five years.

Iran exported US$4.84bn petrochemical products in the first half of the current Iranian calendar year, which began on 21 March 2013; no volumes were indicated in government statistical releases. This would imply that the country is significantly undershooting its target of

US$13bn for FY2013/14, when it hopes to export 17.4mn tonnes of petrochemicals products.

The poorer than expected outcome could partly be explained by lower plant utilisation levels caused by feedstock shortages as well as some maintenance shut-downs. However, BMI believes that the country is struggling with the continued effects of sanctions, the gradual shift towards a more even supply-demand balance in China - Iran's main export market - and the lack of added value to exports.

Full Report Details at
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Faced with a punitive sanctions regime that cuts it out of much of global trade, Iran's export-oriented petrochemicals sector is facing a bleak future while it continues to defy UN Security Council resolutions on its nuclear programme. EU financial sanctions have prompted insurers to refuse cover for cargoes from Iran. London is the global centre for shipping insurance and with the UK an EU member, Iranian petrochemicals exports will struggle to obtain cover. Likewise, shippers do not want to touch any trade that could risk business with clients such as major oil firms.

* The step-up in sanctions will only accelerate capital flight and cuts in foreign investment. In August 2013, South Africa's Sasol exited its Iranian joint venture at Assaluyeh, Arya Sasol. Its stake in Arya Sasol was sold to Main Street 1095, a South African subsidiary of an Iranian investor.
* The domestic petrochemicals market is currently in a slump and unable to absorb the rapid increase in production capacity. The economy contracted by an estimated 2.0% in 2013, although BMI expects a return to growth from 2014. In spite of the economic recovery, major petrochemicals consuming industries will lag behind, with the automotive industry set for anaemic growth while construction and agribusiness will flatline over the next five years.
* BMI forecasts that by 2018, ethylene capacity will total 11.08mn tpa, with the scheduled completion of the Olefins 11 and 12 projects, which will have capacities of 2.0mn tpa and 1.2mn tpa respectively. In 2013-2018, capacities of 1.7mn tpa ethylene, 1.8mn tpa PE, 500,000tpa of other polymers, 5.84mn tpa methanol, 1.68mntpa ammonia and 5.16mn tpa urea are due on-stream, according to current plans. In the absence of any current decision to postpone the projects, BMI has included these capacities in its forecasts. However, new complexes in Ilam (500,000tpa ethylene from 2014) and Assaluyeh (1.2mn tpa ethylene from 2015) are at risk of being delayed or cancelled.

* This quarter, Iran has risen one place in BMI's Middle East and Africa Petrochemicals Risk/Reward Ratings to fifth place as a result of a 1.3 point rise in its score to 58.7 points. It now lies 1.3 points ahead of Israel and 1.7 points behind Qatar in the regional ranking. In spite of an extremely unfavourable operating environment, Iran's score is supported by the addition of new basic chemicals capacity, which has boosted the score this quarter. This has been accompanied by a modest rise in market risk associated with the new administration, although uncertainties continue regarding investment and trade as well as a poorly performing domestic market that ensures low operating rates.

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at

About Fast Market Research

Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

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