Close to 60% of plants that receive feedstock from petrochemical units have shut down and the rest are working at 30% capacity due to lack of raw materials, a board member of the Iran National Plastic and Polymer Industrial Association said.
"Exporting raw material is a top priority for the petrochemical sector. But as the old saying goes 'charity begins at home', providing domestic companies with the much-needed materials should be given higher priority," Mohsen Safaei told ILNA.
Most, if not all, of the difficulties are rooted in poor management and not lack of materials, he stressed.
Safaei noted that the local plastics industry has created huge job opportunities in an array of fields namely food, medicine, recreation and sports sectors, but has been hit hard in recent months due to the recession and worsening economic conditions.
"Petrochemical plants are interdependent and many simply cannot endure unless they receive raw materials—hexanol, ortho-xylene, phenol, styrene, ethylene glycol and vinyl chloride—produced in other factories," he said, adding that volatility in the chaotic forex market has encouraged such material producers to export much higher volumes and this is while most local manufacturers are suffering from shortages.
Petrochemical markets have been in turmoil, particularly with regard to materials like polyethylene terephthalate (PET), the raw material used in the production of oil and food containers.
Not only is PET getting dearer every day, but it also is in very short supply as food companies desperately seek the vital plastic bottles for their products.
> Visibly Unresponsive
Adding insult to injury is the fact that the Ministry of Industries and major petrochemical producers (focused only on exports) are unresponsive and indifferent to the daily appeals of the food companies including prominent companies employing more than 15,000 people and possibly facing closures.
According to Ali Heidarnejad, CEO of Farabi Petrochemical Companyin Mahshahr, the company has been suffering from the lack of raw material and feedstock for long and cannot increase production despite rising demand. Moreover, high cost of raw material imports is pushing the company toward insolvency.
After the US pulled out of the Iran nuclear deal and chaos visited the volatile foreign exchange market, the government announced a fixed rate for the dollar that was much lower than the open market. Afterwards it allocated billions in hard currency to selected companies. That policy led to more corruption and flourishing of the forex black market.
Despite the plethora of problems, some experts including Ahmad Mahdavi Abhari, secretary of the Association of Petrochemical Industry Corporation, believe that the key petrochemical sector must have a strong presence in international markets.
Abhari believes that losing market share in Europe will “lead to irreversible damage as reclaiming the market share would be next to impossible.”
With abundant hydrocarbon resources and new private sector investments, Iran is making added efforts to protect its global share in the sector.
“By expanding the range of products, we can enter new markets in Africa and South America,” Abhari said.
According to the Central Bank of Iran, petrochemical complexes sold goods worth $6 billion during the first five months of the current fiscal.
Revenues generated from petrochemical exports amounted to $12 billion in the previous fiscal that ended in March.
