Impact of Iran nuclear deal on global petrochemicals demand-supply balance

03-Apr-15

Negotiators and diplomats from the 5 permanent members of the UN Security Council, Germany and Iran have been locked in talks over whether, how and when to lift sanctions on Iran, as per Platts. The US and EU on January 20, 2014, suspended certain sanctions on Iran's petrochemical trade for six months, a temporary reprieve that was later extended for a further six months. Years of sanction have seen Iran being choked off from the international banking community, along with dwindling of exports of key petrochemicals methanol and polyethylene. Petrochemicals were largely being exported in exchange for cash through Dubai and banking mechanisms that work directly with China, India and South Korea. The current meeting is the end of a 12-month process that could see Iran once again become one of the world's major exporter of plastics. An easing of sanctions could lead to an investment boom in Iran over the longer term, in the short- and medium-term it is likely to have a limited impact as most Iranian products have been finding a home in Asia. Easing of sanctions will give the Iranians more choices for exports. They have begin exporting to Europe- volumes of exports may not increase, but European buyers may be faced with a greater choice of suppliers.