Will Iran’s re-emergence change balance of petrochem market

An increasing number of countries are expressing an interets in rebuilding ties with Iran's petrochemical sector following the deal reached in mid-July over Iran’s nuclear program and the lifting of restrictions on Iranian exports of petrochemicals. As per Chemorbis, even though it is not clear when the sanctions will be lifted in practice, countries have started to warm-up relations with Iran The first announcement came from Germany to strengthen ties in oil, gas and petrochemical industries with Iran beginning by exports of petrochemical products to Germany while German companies will export technology to Iran A delegation of executives from India’s major energy, power and petrochemical companies also visited Tehran to seek investment opportunities following the removal of economic sanctions. This was followed by visits from Italian and Japanese delegations. Iran and Turkey also announced their plans to build a free zone near the border in order to provide multiple trade-based advantages for companies from the two countries Iran’s current petrochemical production capacity is around 40-60 mln tpa, according to different sources, and there are official declarations to double it in the long run. Iran has recently announced its plan to launch seven petrochemical projects by the end of the current Iranian calendar year on March, 2016. Via the commissioning of the seven petrochemical projects, the country’s production capacity is expected to increase by 4 mln tpa. Iran’s petrochemical exports, meanwhile, were around 17 mln tons in the past year while the country exported around 12 million tons in the first quarter of the Iranian year, according to media reports. The country’s main export destinations were China, Southeast Asia, Turkey, Central Asian and African countries. Following the lifting of the sanctions completely, the country is expected to export more, particularly to Europe, and gain more prominence in the overall petrochemical industry in line with its new projects to expand its capacity. Accordingly, the growing presence of Iran is expected to impact the pricing strategies of Middle Eastern producers in European and Mediterranean markets. The competition may become tougher, in some players’ opinions, particularly during periods of price decreases given the possible supply glut from the country When looked at from a different perspective, the lifting of the sanctions has created some concerns in existing export destinations of Iran, particularly in Turkey, where the plastics industry heavily relies on imports. According to ChemOrbis, now that Iran is a major and nearby supplier of PP and PE for Turkey, players are wondering whether supplies from this country will be shifted to other markets as there will be more alternatives for Iran’s exports in the near term