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With sanctions ending, Iran's JAM looks to Europe, Turkey markets

With sanctions ending, Iran's JAM looks to Europe, Turkey markets
Iran’s JAM Petrochemical Co. sees the expected lifting of nuclear sanctions against the country as a chance to shift 20 to 25 percent of its polyolefin exports from Asia to Europe and improve its access to technology.
Istanbul — In a Dec. 5 interview at the Plast Eurasia Fair in Istanbul, a JPC executive said the company believes sanctions could be lifted in January or February, clearing the way for the rebalancing of its polymer exports.
JPC said the move away from Asia is not entirely related to the sanctions, though.
The company sees the significant new capacity coming online in China, which uses coal and methanol as plastics feedstocks, as dramatically reducing that country’s need for imports, according to Mohsen Farahi, sales and marketing manager for Tehran-based JPC.
The U.S. government expects the sanctions to be lifted as early as January, according to press reports in recent days, and Farahi said he has read similar reports in Iranian press. Under an agreement in July between world powers and Iran, sanctions would be lifted in return for Iran limiting its nuclear program.
“It means we should be more optimistic we can leave the sanctions by the end of January,” he said. “Other experts are saying that the sanctions could be lifted by early February or the end of February.”
Farahi said JPC sees Europe as the top priority for new exports, and said it expects to increase shipments there from about the current 4.4 million pounds a month to about 22 million pounds, with Turkey the second priority, taking in about half that amount monthly.
The Indian subcontinent would be the third ranking target market, followed by Africa, which has been more challenging to grow sales because of poor logistics and infrastructure, he said in an interview at the company’s booth at Plast Eurasia.
One very practical benefit sanctions relief would offer Iranian companies is better access to the world’s financial system. Lifting the sanctions will allow Iranian companies to again use the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, system for transferring money around the world, Farahi said.
When the harshest sanctions were in place, China absorbed more than 90 percent of JPC’s polyolefin exports, in 2013, the company said. Several different rounds of sanctions have been imposed on Iran over its nuclear programs.
But after some limited sanctions relief in January 2014 opened up markets such as South America and North Africa for JPC and 10 other Iranian petrochemical firms, China’s share fell to 75 percent of JAM’s exports by the end of 2014.
“Our plans for the current years is to reduce our market to China from 75 percent to 50 percent,” Farahi said. “Our records show up to now we reduce these figures to 68 percent.”
JPC has capacity of 661.2 million pounds a year of polyethylene and 330.6 million pounds of polypropylene, along with production of ABS and rubber.
He also said the new capacity coming in North America from shale gas feedstocks is a factor in JPC’s decision to want to rely less on Asia.
“In the U.S., by 2017, there would be something around 6 million tons of polyolefins in to the market,” he said. “On the other side, we have a growing [range] of olefins and polyolefins made in China by CTO and MTO.
“All these new capacities will lead to pressure on the biggest hub of consumption of plastics in the world, which is China,” he said.
Lifting sanctions will also give the company better access to buying equipment to complete planned and future petrochemical investments, Farahi said.
An August report by consulting firm IHS Chemical said that major chemical companies are “champing at the bit” to explore opportunities in Iran, even with the significant political and economic risks.
The country has the world’s fourth-biggest supply of oil reserves and second-biggest supply of gas reserves, IHS said, and its ethylene production costs are the lowest in the world, along with Saudi Arabia and North America.
Iran could potentially expand production and exports by an additional 2.2 billion pounds of ethylene and PE within 12 months of lifting sanctions, IHS said.
 
Best Regards,
Mohsen Farahi
Marketing & Sales Manager
Dec 14, 2015 10:10
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