گزارش تحلیلی بیزینس مانیتور-صنعت پتروشیمی درایران-سه ماهه دوم2011

Although petrochemicals output growth rates appear impressive, BMI’s latest Iran Petrochemicals Report states that capacity utilisation is low and that the country is likely to face a period of overcapacity as domestic demand struggles and exports suffer the effects of the international sanctions regime.

The Iranian government claimed the country produced 30mn tonnes of petrochemical products during the first nine months of FY2010/11, up 24% y-o-y. Around 10.32mn tonnes of petrochemicals were exported, up 22% y-o-y, and were valued at US$6.45bn, up 47% y-o-y. Iran exported around 14mn tonnes of petrochemical products worth more than US$9bn in 2009. China was Iran’s largest petrochemicals export market, worth US$1.65bn and representing a share of over 25%. This was despite the fact that the country stopped production of aromatics to increase petrol production. Government officials, stating that tota production capacity was 51mn tpa, projected output of 40mn tonnes for the year as a whole, which would put capacity utilisation at all its 39 petrochemicals complexes at around 80%. This would include National Petrochemical Company (NPC)’s planned four new petrochemical projects due to open in Q111, including the 240,000tpa PVC unit of Arvand Petrochemical Complex, a PE unit at the Amir Kabir Complex, part of phase 2 of Fajr Complex and the hard PS unit of Tabriz Complex.

According to industry sources in Iran, the country’s polyolefin consumption in FY2010/11 is expected to hit 1.7mn tonnes, up by nearly 8% y-o-y. PE would account for 64% of the total, while PP will represent the remainder. Domestic consumption represents around 39% of Iran’s combined PE and PP capacity of 4.4mn tpa. Growth levels are disappointing and should be at least double this level, in line with similarly positioned markets. Meanwhile, international sanctions have limited market growth, particularly in th petrochemicals-intensive automotive and electronics segments where investment has been severely curtailed. Even with strong export growth, the moderation in domestic consumption means that polymer plants are operating well below nameplate capacity; Iranian producers had said that plants were not performing at full capacity owing to technical problems.

Consumption is being led by demand from utilities such as gas and water supply, which is fuelling strong demand growth for PP and PE pipes. Together pipes are projected to grow 10% y-o-y in FY2010/11 to 330,000 tonnes, of which 75% will be PE pipe grade and the remainder PP random copolymer pipe grade (PPR), although PPR is expected to replace PE pipe in coming years. However, Iran is dependent on imports for PPR and PE pipe grades, mostly from South Korea, the UAE and Saudi Arabia, indicating that the domestic industry is struggling to respond to trends in the Iranian market. Film grade HDPE and PP fibre and raffia grades are also benefitting from high levels of growth in the food packaging, carpet and food grain segment, but Iran has more than enough capacity to cover domestic demand.

This quarter, Iran has maintained its fifth-place rank with 56.5 points in BMI’s Middle East And Africa Petrochemicals Business Environment Ratings, unchanged since the previous quarter. This puts it 0.5 points behind Kuwait and 1.3 points ahead of Israel. With the state sector dominating the petrochemicals industry, Iran’s Market Risks score is low, with high levels of economic and political risk pulling down its score. In order for an improved score and ranking, Iran needs a more positive political risk outlook and a breakthrough in terms of the regulatory regime. This looks unlikely on a short- to medium-term view.