Iran's Non-Oil Trade Surplus Hit $1b

EghtesadOnline: Iran registered a non-oil trade surplus of $1 billion in the first five months of the current fiscal year (March 21-Aug. 22), according to Mehdi Mirashrafi, director general of the Islamic Republic of Iran Customs Administration.

News ID: ۷۸۶۹۰۸

29 August 2021

Iran’s total foreign trade hit 59.3 million tons worth $34 billion during the period, registering a 14% and 38% growth in weight and value respectively, year-on-year, the news portal of IRICA reported.

Non-oil exports reached 45.5 million tons worth $17.66 billion, registering a 20% and 63% growth in weight and value respectively compared with the corresponding period of last year.

The exports mainly included methanol, natural gas, polyethylene, semi-finished iron products, iron ingots and pipes, gasoline, liquid propane, urea and bitumen.

The first five destinations of Iranian exports were China with 12.3 million tons worth $5.9 billion, Iraq with 12 million tons worth $3.16 billion, the UAE with 5 million tons worth $1.9 billion, Turkey with 1.37 million tons worth $1.1 billion and Afghanistan with 2.16 million tons worth $885 million.

Imports stood at 13.8 million tons worth $16.63 billion from March 21 to Aug. 22, registering a 5% decline in terms of weight but a 21% growth in terms of value YOY.

The top 10 imported goods and products were cellphones, feed corn, soybeans, sunflower oil, barley, wheat, soymeal, palm oil, sugar and carbon electrodes.

Cellphones Top Import List

Cellphones topped the list of imports to Iran.

Latest IRICA data show 5.16 million devices worth $1.16 billion were imported during the first four months of the current Iranian year (March 21-July 22), registering a 28% and 102% growth in the number of devices and value respectively.

The imported cellphones mainly came from the UAE, China and Vietnam.

Samsung, Xiaomi, Huawei and Nokia were the main brands of imported cellphones.

The average price of each device stood at $224 during the period under review, which was $82 higher than the $142 in the corresponding period of last year.

Iran’s imports stood at $14.58 billion in the four-month period, of which 8% belonged to cellphones.

“One of the most important reasons for the rise in imports could be the increasing need for cellphones at home by students because of virtual education, due to the Covid-19 pandemic and closure of schools and foreign language academies,” an IRICA official, Arezoo Ghanniyun, was quoted as saying by Mehr News Agency.

She also pointed out that the limited operating lifespan of these cellphones (an average of three years for each device) is another reason for the rise in imports and the need to buy new products.

The number of cellphones imported by passengers stood at 92,721 devices during the same period, therefore the total number of imported cellphones hit 5.25 million devices in the four months.

UAE: Biggest Exporter to Iran

The imports mainly came from the UAE (4.43 million tons worth $5.39 billion), China (1.1 million tons worth $3.6 billion), Turkey (1.57 million tons worth $1.8 billion), Germany (341,000 tons worth $668 million) and Switzerland (692,000 tons worth $572 million).

According to Mirashrafi, a total of 4.72 million tons of commodities were transited via Iran during the same period, showing a 95% surge compared with the similar period of last year.

Decline in Fiscal 2020-21 Trade

Nevertheless, Iran’s non-oil foreign trade declined from $85 billion in the fiscal 2019-20 ($41.3 billion worth of exports and $43.7 billion of imports) to $73 billion in the fiscal 2020-21 ($34.52 billion exports and $38.5 billion imports).

Statistics released by the Central Bank of Iran show that except in the month to Oct. 21 and the one to Nov. 20, Iran’s trade balance was negative in every month last year.

The two aforementioned months registered a trade surplus of $1.42 billion and $0.12 billion respectively.

The highest export value was registered in the month to Oct. 21 with $4.67 billion weighing 19.26 million tons while the month to March 20 registered the highest import value with $4.57 billion weighing 2.92 million tons.

The lowest export and import value were registered in the month to April 19 with $1.65 billion weighing 5.35 million tons and $1.93 billion weighing 2.53 million tons respectively.

According to the Trade Promotion Organization of Iran, there were four main reasons behind the decline in Iran’s foreign trade in the fiscal 2020-21 compared with the years from fiscal 2011-12 to 2013-14.

The first reason behind the decrease was the decline in oil revenues. A portion of raw material costs are supplied from oil revenues. The decline in revenues affected foreign exchange earnings and the purchase of raw materials for export products. Therefore, it caused a decline in volume of exports during the period.

Currency shock is another reason behind the decline as it affected non-oil exports. Iran’s currency market faced an unpredicted shock in the fiscal 2020-21 due to the intensification of US sanctions, a decline in foreign exchange reserves and the Covid-19 pandemic.

Alongside these problems, the Central Bank of Iran’s forex earnings law made some exporters unable to meet the CBI requirements, so they stopped exporting their products and waited for the currency market and forex laws to stabilize.

The US imposed sanctions on petrochemical industries and 39 related institutions, and the US Department of Treasury banned the transaction, purchase and extension of credit and insurance services to Iran by other countries. Low oil prices also impacted petrochemical export in the fiscal 2020-21 alongside the US sanctions.

The Covid-19 pandemic was another reason behind the significant decrease in trade. Closure of borders, new standing Iranian products, especially agricultural and food products, caused a decrease in Iran’s foreign trade.

Iran and the US are holding indirect negotiations on a return to compliance to the 2015 Iran nuclear deal, formally known as the Joint Comprehensive Plan of Action. Representatives of Britain, China, France, Germany, Russia and European Union are shuttling between the US and Iranian delegations.

JCPOA limited the scope of Iran's nuclear. In return, the Islamic Republic received relief from US and international sanctions. Washington walked out of the deal under the administration of former president, Donald Trump.

With a likely agreement between the two countries and the lifting of sanctions, obstacles such as the US sanctions may be removed and there is an opportunity for Iran to increase its foreign trade.