The end of international economic sanctions on Iran has created a 'gold rush' mentalist throughout the petrochemicals industry.
Iran
This is according to a new report published by Ceresana titled 'Market Study: Petrochemicals and Plastics - Iran'. The country of 75 million inhabitants is home to rich oil and gas resources which are set to disrupt the global status quo.
After almost a decade of isolation, demand for investments has been enthusiastic but there are still obstacles to overcome before business can resume as normal to the Middle Eastern petrochemicals power player.
In the report, the market for petrochemical products and plastics in Iran has been analysed in detail for the first time: from raw materials such as methanol, ethylene, propylene, butadiene/ butylene and aromates, to their direct derivates and intermediates, and to plastics such as polypropylene and polyethylene.
Capacities and production in Iranian petrochemicals increased in recent years. In 2015, total capacity of methanol, ethylene, propylene, butadiene/butylene, aromates and the derivates of these products amounted to 31 million tonnes. Production capacity for the production of ethylene thereby accounted for more than 23 per cent of the total capacity. Furthermore, ethylene derivates, such as ethylene dichloride (EDC) and ethylene glycol, accounted for almost 17 per cent of capacity. Another 4.8 million tonnes of capacity were consumed by the three types of polyethylene plastics LDPE, LLDPE, and HDPE. In the short-medium term, another expansion is planned. Part of this project is under construction already and is planned to be completed by 2018/19 and additional plants are in the pipeline, with the aim to increase capacity to 36 million tonnes by 2023.
Although the Iran is one of the largest domestic markets for petrochemical products in the Middle East, the focus of many Iranian companies is on export. Accounting for approx. 6.8 million tonnes, a major part of petrochemical products was exported in 2015. Report authors expect this volume to almost double by 2023.
Methanol is the most commonly exported product - in 2015, export volume amounted to almost 3.4 million tonnes. The second most important export product was HDPE. Major part of the exports was delivered to the region Asia-Pacific, mainly to China. Although demand for imports in China is currently high, growth rates are expected to decrease in the long term. This limits the growth of export for products from Iran in the future. At the same time however, new possibilities are revealed: especially exports to Western and Eastern Europe as well as to other Asian countries. To fulfil this aim, numerous constructions of petrochemical plants are supposed to be completed with the aid of foreign investors.
Due to the abolition of sanctions concerning the export of petrochemical products in 2014, exports have been rising again. The report assumes that the economic situation in Iran will improve considerably after the abolition of almost all sanctions and anticipates an increase of trade volume for various goods in the future.