FocusIran petrochemical exchange to boost trade

18 February 2008 11:32  [Source: ICIS news]

By Florence Tan and Prema Viswanathan

SINGAPORE (ICIS news)--Iran has launched an oil and petrochemical exchange to trade linear low density polyethylene (LLDPE) and more products such as other polymers and monoethylene glycol (MEG) could be available soon, producers and traders said on Monday.

The exchange, which started polymers trading ahead of the Dubai exchanges, was expected lift prices, boost trade and increase transparency in the domestic market, traders said.

Around 5,000 tonnes of LLDPE was sold on the first day at $1,421/tonne (€966/tonne) ex-works, said A Rezaei, a consultant at the Iran Mercantile Exchange.

The exchange, situated in a free trade zone on Kish island in the northern Gulf, would deregulate prices in the oil and petrochemical industry and attract more investment into the oil industry, he added.

Unlike the London Metal Exchange, which has a platform to trade polymer futures, trades on the IME are carried out on a spot basis in Iranian rials.

Arak Petrochemical would be offering MEG on the exchange on Saturday, followed by other polymers in the second quarter, a source close to the company said.

He added that state-owned Iran Petrochemical Commercial Co (IPCC) offered its LLDPE on the first day of trade.

IPCC sells fixed amounts of polymers to local companies at subsidised prices. The exchange would also plug a loophole in the system where subsidised polymers were exported by traders at a higher price, an industry source said.

A Dubai-based trader who sells polymers into Iran said he would not be affected, but the move would make the domestic market more competitive. However, end-users might end up having to pay higher prices, he added.

The exchange could include more oil derivatives and crude oil contracts in the future, Rezaei said, but he could not say which chemicals and when these will be added.

($1 = €0.68)

For more on LLDPE and MEG visit ICIS chemical intelligence

By: Florence Tan
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