China challenge changing Iran’s petrochemical export destinations

EghtesadOnline: Over the past few weeks, Iran’s petrochemical sector has been subject to many ups and downs, bringing about new sweeping changes in the industry and international customers of its products.

News ID: ۷۷۸۱۱۷

02 August 2017

While some domestic exporters of petrochemicals, mostly the private ones, are facing problems in selling products to China and receiving their money from Chinese customers, efforts are underway by them as well as other Iranian companies involved in the sector to find new markets for their products, which have apparently yielded favorable results, IRNA reported.

**China challenge

China used to be, and still is, an importer of petrochemicals from Iran. Nevertheless, over the past few weeks, the Chinese government has begun implementing new laws and regulations to tighten supervision over imports of petrochemicals form Iran and strictly monitor money transfers to and from the country.

Due to this the Iranian companies involved in the sector are currently beset with a host of problems in receiving the payments for their products at home.

In reaction to this issue, some inside the country maintained the implementation of the stricter import laws and regulations are aimed at fighting money laundering, while some critics, without sufficient evidence, said that they have been adopted under the pressure of the US and Saudi Arabia, adding China had sanctioned imports of Iranian petrochemicals, which was later denied by the authorities.

Last week, nevertheless, Iran’s Oil Minister Bijan Namdar Zanganeh said the government is providing assistance to domestic petrochemical companies to overcome the difficulty in receiving payments for petrochemical exports to China.

He added the root of the problem is business-related, not political, saying, “The firms involved are private companies, not public ones, and they, themselves are following up the issue.”

Responding to a question about when the problem will be solved, Zanganeh said, “It is not clear, we are only one party to the issue and the other is China.”

Earlier, Marzieh Shahdaei, the deputy oil minister for petrochemical affairs, said there is no problem in exporting petrochemicals to China but receiving the money for the exports has been problematic.

“The government is pursuing the issue and the Chinese ambassador in Tehran has been asked to provide sufficient explanations.”

**New destinations

Although Iran has not managed yet to resolve the problems faced by the country’s overseas sales of petrochemicals to China, domestic private petchem companies have found new European, African and South American markets.

Even though, apparently, a major part of Iran’s petrochemicals are expected to be destined for these new destination, the country’s banking problems caused by the Western sanctions still persist, making it difficult for Iranian exporters to transfer payments for their products to Iran.

**Antwerp agreement

Following Iran’s negotiations with the European Union, the Port of Antwerp in Flanders, Belgium, has accepted to play host to the Middle Eastern state’s petrochemicals.

Antwerp is one of the EU’s most important petrochemical ports and hubs, Fars News Agency reported.

Most of the world’s exporters of petrochemicals and polymeric products either construct or rent depots in the Belgium port to store their products and, later, export them to the EU member countries.

Antwerp is the second largest port in the world and Europe in terms of the capacity to store petrochemicals and export and import goods, respectively. It is the world’s first port in diamond trade.

Currently, the port is Europe’s biggest petrochemical hub. The annual amount of goods entered or exited from the port reaches up to 220 million tons. In addition, the petrochemical industry’s biggest integrated production and development chain has been formed in the port. Antwerp is also Europe’s biggest hub for ethylene production.

Source: Iran Daily (Tehran-based English newspaper)