Iran's polyolefins trade with Asia is unlikely to be affected by tougher sanctions imposed by the United Nations. Trade is expected to continue normally despite the recent tougher UN sanctions on Iran to halt its nuclear program, as per ICIS. On 10 June, the UN issued its fourth round of sanctions against Iran. A few days later, the US and the European Union came up with their own set of sanctions against Iranian companies. These sanctions have made payment and shipping processes for Iranian cargoes more complex, they have not succeeded in completely arresting trade, as some banks and shipping companies had been excluded from the list of restricted firms. Though, a fortnight ago, the Bank of China has stopped accepting letters of credit (LCs) for Iranian cargoes, Iranian suppliers can still accept LCs through other Chinese banks.
China is a major buyer of Iranian polyolefins with significant increase in exports in the past two years after several new Iranian plants, including Laleh Petrochemicals, Jam Petrochemical, and Arya Sasol Petrochemical, came on stream. Iran exported 38,443 tons of LLDPE, 215,919 tons of HDPE and 127,893 tons of LDPE to China during the January-May 2010, which were 15%, 79% and 266% higher, respectively, over the same period last year, according to data from China Customs.
Polyolefins exports to Japanese traders were, continues to be normal. Trading houses in Japan and South Korea usually sell the Iranian cargoes to buyers in China and southeast (SE) Asia. Trading houses in South Korea have been forced to reduce their offtakes since 7 July when domestic banks stopped issuing LCs for Iranian cargoes. As most Iranian cargoes were sold to Japanese traders or to buyers in China, the lack of South Korean traders would not impact the sales much.