Turkey's Petkim negotiating for northern Iraqi naphtha - Erste

23 April 2013 16:05  [Source: ICIS news]

LONDON (ICIS)--Sole major Turkish petrochemical producer Petkim is in negotiations to purchase naphtha feedstock from Northern Iraq which carries a significant cost advantage over alternative imports, Erste Group Bank said on Tuesday.

Petkim was negotiating for the delivery of 350,000 tonnes/year of Northern Iraqi naphtha, with the first consignment to arrive in the third quarter of this year, it added.

“According to Petkim's estimate, the transport cost could take some $150/tonne, but even with this relatively high expense, the feedstock cost can be some $70/tonne cheaper than the current market price of around $830/tonne,” said Tamas Pletser, an analyst at Erste.

Petkim started negotiations for the naphtha – which would cover about one fifth of its current feedstock demand – after in November last year the Turkish government issued a decree permitting the import of Iraqi naphtha into Turkey for use as a raw material in petrochemical production, Pletser said.

The government is concerned that petrochemical imports account for approximately one quarter of Turkey's trade deficit and is therefore minded to encourage Petkim to make its production more competitive against imported goods, he added.

In recent years, Petkim's profitability has been hit by competition from petrochemical producers that use ethane feedstock, which is cheaper than naphtha feedstock.

By: Will Conroy
+44 20 8652 3214

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