Iran’s C2 suppliers seek export outlets after pipeline shutdown

SINGAPORE (ICIS)–Ethylene (C2) producers in flood-hit Iran are seeking to export cargoes after domestic downstream plants lowered operation due to damages to a major ethylene pipeline, market sources said on Wednesday.

Military vehicles rescue people after flash flooding around the northern city of Aq Qala in Golestan province, Iran. 25 March 2019 (Photo by Mohsen Esmaeilzadeh/AP/REX/Shutterstock)

A section of the West Ethylene Pipeline linking crackers in Asaluyeh in southern Iran to polyethylene (PE) makers in the western region exploded last weekend due to leakages, they said.

There might have been another one to two blasts following the first accident that happened in the western province, according to one of the sources. The whole pipeline is currently shut, the source added.

PE producers such as Ilam Petrochemical and Kordestan Petrochemical have since shut their plants, while several other companies are operating their facilities at reduced rates.

It could take up to a month to restore ethylene supply to the western region as repair works on the pipeline will be hampered by the scale of the disaster, with much of the country submerged and infrastructure impaired, market sources said.

Heavy rain began in mid-March in northeast Iran and has since spread across the country.

Ethylene producers are seeking to reduce their inventory through exports, with enquiries heard for tonnage space for cargoes loading from mid-April, according to shipping sources.

The available supply could total at least 12,000-15,000 tonnes, assuming that there are ship owners and buyers willing to support such trade, a market source said.

Renewed US sanctions have made potential buyers wary of doing business with Iran. Several ethylene importers in the key China market said they would not be able to accept cargoes from that country, citing financial and logistics constraints.

Producers in Iran will likely have to cut output at their crackers in order to manage their stock, in view of the limited export option, market sources said.

Meanwhile, Iranian producers are also looking for vessels to move ethylene from Asaluyeh to Bandar Imam Khomeini (BIK), but cargo movements will be restricted by the size of the terminal at BIK, a source said.

Focus article by Yeow Pei Lin