29 November 2013 06:05 [Source: ICIS news]
By Angie Li
SINGAPORE (ICIS)--Iran may not shore up its polyethylene (PE) exports to China in the near term, with access to the more lucrative Europe market likely to open up once the international sanctions on the Middle East country are fully lifted, industry sources said on Friday.
Higher prices will be the incentive for Iranian producers to move cargoes to Europe, but exports to China are not expected to decline, they said.
In China this week, low density polyethylene (LDPE) prices were at $1,660-1,725/tonne (€1,228-1,277/tonne) CFR (cost and freight) China; high density PE (HDPE) at $1,510-1,550/tonne; and linear low density PE (LLDPE) film at $1,510-1,550/tonne, market sources said.
In Europe, LDPE was assessed at €1,280-1,310/tonne ($1,729-1,770/tonne) FD (free delivered) NWE (northwest Europe); LLDPE stood at €1,250-1,260/tonne FD NWE; and HDPE film was at €1,210-1,240/tonne FD NWE in the week ended 22 November, according to ICIS data.
Iran has agreed on 24 November to curb its nuclear enrichment activities in exchange for the partial lifting of international sanctions estimated to be worth $7bn. The historic agreement with world powers is in effect for six months.
Trade and financial dealings with Iran have become more difficult when international sanctions were tightened on suspicion that the Middle Eastern country is developing a nuclear weapon.
Iran has been mainly moving polymer cargoes to China and India, as access to the European market was restricted as the western region is a major proponent of the international sanctions.
While there are hopes that Iran’s recent agreement with the world powers will eventually lead to a full lifting of the sanctions, it is still early days to be too optimistic, industry sources said.The sanctions relief for now is “limited” and “reversible”, according to Chinese industry sources.
Iran has about a 16% share in China’s total polymer imports of 7.09m tonnes during the first 10 months of the year, data from China Customs showed.
LDPE and HDPE account for the bulk of the 1.1m tonnes of polymers that Iran shipped out to China in January-October 2013, the data showed.
China, the world’s second biggest economy, is a major importer of PE with annual demand estimated at 19.8m tonnes, about 43% or 8.6m tonnes of which is derived from imports.
With Iran adding PE capacity of about 900,000 tonnes/year in 2014, it would need more export outlets like China, industry sources said. No breakdown of the expected additional capacity is available.
Among Iranian companies that are due to bring their facilities on stream next year are Kordestan Petrochemicals and Mahabad Petrochemicals – subsidiaries of Bakhtar Petrochemical – and Ilam Petrochemical, which is owned by the Petrochemical Commercial Co of Iran, industry sources said.
($1 = €0.74 / $1 = CNY6.09)
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