Lifted Iran sanctions could add 500,000 t/y in PE exports: bank

27 November 2013 17:40  [Source: ICIS news]

LONDON (ICIS)--Lifting sanctions on Iran could potentially increase global polyethylene (PE) exports by 500,000 tonnes/year in the near-term, along with a comparable amount of other ethylene derivatives, US investment bank Jefferies said on Wednesday.

According to Jefferies, the rise in exports could take until 2015 to properly emerge, but is likely to increase, until operating rates could be as high as 1.5m tonnes/year within three to five years.

Increased exports from Iran would be likely to increase pressure on pricing and margins for Asian producers, the firm added. Annual global ethylene capacity is predicted to increase from 159m tonnes in 2013 to 188m tonnes by 2018, of which 10m tonnes is expected to come from debottlenecking and 19m tonnes from greenfield projects.

Reduced sanctions for Iran could also reduce oil prices by stripping out a degree of political risk, Jefferies added.

“If sanctions are lifted, it appears reasonable that the geopolitical risk premium embedded in oil prices could shrink to some extent, offsetting any near-term lift from an economic recovery in Europe or China,” the company said in an analyst note.

“Longer-term, access to global supply chains and engineering capabilities could lead to another round of investments in the region in 2016-2020, and add to the uncertainty (and incentive to hesitate) on US petrochemical projects,” it added.

Iran also currently produces 3.5m tones/year of methanol, compared to 5m tonnes/year of nameplate capacity, Jefferies added. Operating rates could increase with access to spare parts and international engineering expertise, Jefferies said.

Both the EU and US are negotiating lightening sanctions on the country.

By: Tom Brown
+44 208 652 3214

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