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Middle East: Iran's 2010-11 polyolefins production lags consumption growth: report

https://www.chemnet.com   Mar 11,2011 Platts
Iran would have consumed 1.7 million mt of polyolefins when the Persian fiscal year 2010-11 closes on March 21, up 8% from a year earlier, financial information provider Business Monitor International said in a report released Wednesday.

The country would still face overcapacity as it finds it increasingly difficult to export cargoes in the wake of US-led sanctions, BMI said.

The sanctions are part of an international effort to force Tehran to halt its uranium enrichment program, which Washington and its allies suspect is a bid by the Islamic Republic to produce atomic weapons. Iran denies the allegation and insists that its nuclear program is peaceful and designed to generate electricity.

"Growth levels are disappointing and should be at least double this level, in line with similarly positioned markets. Meanwhile, international sanctions have limited market growth [in Iran], particularly in the petrochemicals-intensive automotive and electronics segments where investment has been severely curtailed," the report added.

Polyethylene would account for 64% of the total polyolefins consumption the rest being polypropylene, BMI said. Domestic consumption represents around 39% of Iran's combined PE and PP capacity of 4.4 million mt/year.

Iran's polymer plants are operating well below their nameplate capacity, BMI said. "Stating that [the country's] total production capacity was 51 million mt/year, projected output of 40 million mt/year for the year as a whole would put capacity utilization at all its 39 petrochemicals complexes at around 80%," it added.

Polyolefins consumption in Iran is being led by demand from oil and gas utilities for PP and PE pipes. Though Iran faces overcapacity for polyolefins as a whole, it is dependent on imports for polypropylene random copolymer and PE pipe grades.

It imports PP and PPR pipes mostly from South Korea, the UAE and Saudi Arabia, suggesting that the domestic industry is struggling to respond to trends in the Iranian market, BMI said. Together the demand for pipes is projected to grow 10% year on year in fiscal 2010-11 to 330,000 mt, of which 75% will be PE pipe grade and the remainder PPR grade, it added.

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