Iran’s PP, PE exports to Pakistan to double in 2009

03 November 2009 05:37  [Source: ICIS news]

By Prema Viswanathan 

SINGAPORE (ICIS news)--Iran’s exports of polyethylene (PE) and polypropylene (PP) to Pakistan are set to double year-on-year in 2009 to 64,000 tonnes, and surge 17% to 75,000 tonnes in 2010, industry sources said on Tuesday.

The estimates were based on Pakistan customs department data for the January-September 2009 and full year 2008.

“The sharp increase in imports of Iranian cargoes into Pakistan is due to the recent start-up of new plants such as Mehr Petrochemical and Laleh Petrochemical and stabilisation of output at plants which came on stream last year,” said a Karachi-based polymer trader.

The share of Iranian cargoes in total shipments from the Middle East was therefore expected to rise to 17% in 2009, from 11% the previous year.

Polyolefins imports from the rest of the Middle East were expected to surge by 21% in 2009, from 2008, to 302,000 tonnes, the sources said.

The delay in Iranian shipments due to diversion of cargoes through Jebel Ali port in the United Arab Emirates – an offshoot of US sanctions against Iran and inadequate port infrastructure at Assalayuh, blunted the appetite for Iranian cargoes in previous years.

“But lately, the supply problems have been mitigating, or been offset by discounts offered by Iranian suppliers,” the trader said.

Quality concerns about Iranian material, which used to be considered below par compared with the rest of the Middle East cargoes, have also dissipated with the start-up of new plants in Iran, he added.

Despite the surge in Iranian exports to Pakistan, however, Saudi Arabia continues to be the biggest exporter of polyolefins to the South Asian country.

Pakistan’s imports of Saudi Arabian PE and PP were expected to rise by around 8% to 168,000 tonnes in 2009, due largely to the start-up of new plants in late 2008 and 2009 such as NatPet PP, Advanced Polypropylene Co, Saudi Ethylene and Polyethylene Co, a second trader said.

“With Petro Rabigh,  Al Waha Petrochemical and Yansab also stabilising operations at their complexes, we expect imports from Saudi Arabia to increase significantly in 2010,” he said.

However, worries over an erosion of demand, given the energy crisis, security situation, and liquidity squeeze in Pakistan, could upset these projections, traders and end users cautioned.

“Our operating rates have been hit by persistent power cuts this year, prompting us to hold back from purchasing large volumes of polymers,” said a PE converter.

Credit curbs by Pakistani banks have also deterred end users from holding high inventories of raw material, said a PP converter.

Adding to these problems were concerns that the ongoing terror attacks could destabilise the economy and cause demand growth to slow, he added.

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By: Prema Viswanathan
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