Iran’s petrochemicals industry could stagnate or contract in 2010

09-Dec-09

Iranian petrochemicals industry is headed for contraction or stagnation in 2010 with prospects for significant project delays and lower rates of capacity utilization, according to Business Monitor International (BMI). There is ample evidence for the conclusion per BMI. There have been few year-end indicators from individual petrochemicals producers to judge the accuracy of official statistics, which suggest 18% growth in the 2008/09 Iranian year, despite the country's economic slowdown and a sharp decline in demand from key export markets. BMI said sales and therefore production have been affected by the global economic downturn, with a contraction in output of up to 10% in the H2 of 2008-09. It estimates that Iranian petrochemicals exports reached 11.2 mln tons in 2008-09, which is 1.8 mln tons below the target set by Iran's petrochemical exporter, the IPCC. In terms of value, BMI estimates the value of exports to be around $7.9 billion, US$1.1 billion below IPCC's target but still 32% above the previous year. The situation may have been worse if it had not been for the final completion of the Jam Petrochemicals Complex in December 2008, three years behind schedule. It is hard to believe that the collapse in the Persian Gulf property market, with its resulting effects on construction, and the slump in the automotive industry--two major petrochemicals consumers--will not have a major negative impact on the Iranian petrochemicals industry, both in terms of current output and planned capacity expansion.