Floating Feedstock Pricing to Help Sustain Production, Boost Profit

Adopting a floating pricing mechanism for feedstock delivered to the petrochemical sector is necessary to help sustain production and guarantee long-term profit, the head of Masjed Soleyman Petrochemical Company in the southern Khuzestan Province said.
“Using a floating pricing system can help firms adjust the prices of their products based on a set percentage of any changes in the feedstock prices,” Mehdi Mohammadi was also quoted as saying by ILNA.
Because the tariffs of petrochemical goods experience wild fluctuations, supplying the plants with feedstock at a fixed price does not make economic sense and is likely to incur losses, he added.
The official noted that the implementation of a floating pricing system can help companies increase their profit margin, but the sale of natural gas as feedstock to petrochemical companies at exorbitant prices will push most of them over the edge.
Costly feedstock prices have encouraged investors to stop their business in Iran and instead fund petrochem projects in Qatar where feedstock tariffs are half as much as Iran’s.