31 January 2012 03:30 [Source: ICIS news]
By Heng Hui
SINGAPORE (ICIS)--Some Asian traders are using creative methods to obtain Iranian petrochemical products as US and EU-led international sanctions imposed on Tehran tighten, industry sources said on Tuesday.
The US and Europe have increased the pressure on Iran's government following a November 2011 report from the UN which said there was strong evidence that Iran is trying to build a nuclear weapon.
Latest sanctions from the EU include an immediate ban on oil imports and a gradual phase-out of existing contracts by July 1. It has also outlawed petrochemical imports from ?xml:namespace>
Asia is divided on its stand on Iran sanctions, partly because of the country’s strategic importance as a source of crude oil and petrochemicals to the region.
However, dealing with
Iranian products are offered at competitive prices, but it is a case of Asian market players simply needing the
Some buyers have turned to using non-traditional currencies in trades, including the Japanese yen and the United Arab Emirates' (UAE) dirham, for letters of credits (LC) to pay for Iranian cargoes.
With trade financing increasingly becoming a problem, payments via telegraphic transfers (TT) were introduced but these only work for market players with deep pockets, industry sources said.
“I have been paying through Dirham-denominated TT,” said an Indian trader.
Telegraphic transfers are done by buyers within 30 days upon delivery of the Iranian cargoes, with freights collected by ship owners by the same means from Turkish banks, sources said.
Sellers said they have and can receive payment through
“They prefer it this way as well, so they save on the interest charges of not obtaining credit,” said a source from an Iranian petrochemical producer.
“We accept any method of payment that works,” said another producer.
Others are consenting to changing the origin of Iranian cargoes, market sources said.
For liquid petrochemicals such as methanol,
An idea of a bartering system, which will remove the need for financing a transaction, is being floated whereby
However, there are concerns that these windows of opportunities for trades may soon get smaller, as sanctions imposed by the
Trading of Iranian petrochemical products such as polymers had ceased in
China, which is Iran’s biggest export market for methanol and PE, has been cutting volumes of imports, following restrictions imposed on South Korean banks in handling tri-party transactions.
South Korean financial institutions had traditionally acted as the middle man for transactions between
An Iranian methanol producer had committed 60–70% of its production this year to
“We are in the final stages of negotiation with
“We are still able to open through Japanese banks, although we are not sure how long this will last,” the source said.
A few South Korean traders were also heard to be in the final stages of negotiation with Iranian producers.
Asian buyers said they could not sign contracts with
The EU’s broadened sanctions on crude oil and petroleum products prohibit the import, purchase and transport of such products as well as related finance and insurance.
This could mean that huge uncontracted volumes of Iran-produced methanol would find their way into the spot market, traders said.
Some ethylene traders in Asia said import business with
However, the sanctions could ultimately weigh on
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Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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