Sanctions to slow Pakistan's polymer imports from Iran - traders

18 June 2010 13:27  [Source: ICIS news]

SINGAPORE (ICIS news)--Pakistan’s imports of Iranian polymer cargoes could slow after the country’s banks issued a directive on Friday that bans the opening of letters of credit with Iranian state-owned banks as part of the international community’s latest efforts to halt Iran’s nuclear programme, Pakistan-based traders said.

Pakistan is a major importer of polyethylene (PE) and polypropylene (PP) from Iran. Iran’s exports of PE and PP to Pakistan doubled in 2009 from 2008 to 63,000 tonnes, according to Pakistani customs data.

Following the 10 June passage of additional UN sanctions against Iran, the EU on 17 June proposed tougher sanctions against the country while the US on 16 June introduced stricter measures directed at Iranian companies.

Guidelines issued by the US Treasury Department’s Office of Foreign Assets Control have directed banks not to honour transactions with affiliates of Iran’s Petrochemical Commercial Co in Dubai, Singapore, India, China and Turkey, according to a document obtained by ICIS.

Petrochemical Commercial Co is the sales and marketing arm of Iran’s state-owned petrochemical major National Petrochemical Co.

Traders, however, differed over the extent of the impact that UN/EU sanctions and US measures would have on Iran’s trade with Pakistan.

“There are several Iranian companies besides [Petrochemical Commercial Co] through whom [letters of credit] can be opened without violating the sanctions or guidelines,” said a trader.

The trader said he was aware of a letter of credit having recently been opened with a Dubai-based bank for a polymer consignment from Iran through an Iranian company that had not been named in the US guidelines.

Another Pakistan-based trader said the sanctions would make it particularly hard for Iranian cargoes to reach their customers on time, and the delays could deter buyers from opting for consignments of Iranian-origin material over cargoes from other destinations.

The impact of sanctions on Iran’s petrochemical trade with countries other than Pakistan could not be immediately determined.

In addition to polymers, Iran exports significant volumes of methanol, olefins and other products to Asia and Europe.

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Read John Richardson and Malini Hariharan’s Asian Chemical Connections blog
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By: Prema Viswanathan
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