Prices of polyethylene terephthalate (PET), a form of polyester that is used in the production of plastic bottles, have plummeted by 56% in recent days after sharp rise over the past few months, the secretary of Mineral and Potable Water Producers Association said.
Peyman Forouhar said prices that had climbed to a record level of 250,000 rials ($2.2) per kilo have now fallen to 110,000 rials ($1.2), ISNA reported.
Reportedly, the prices experienced a 500% hike in July, increasing to about 250,000 rials ($2.2) from around 35,000 rials (27 cents) before the tanking of the rial.
"Output of mineral water normally declines by almost 40% in the cold season."
Although prices have decreased, the industry is expected to post a 60% reduction in output in the present fiscal (ending March 20, 2019) as the current level of PET prices are still not reasonable enough to encourage producers to boost production, he said.
"The bottled water market is not appealing to middlemen in winter due to low demand, which explains why they move their investments to more lucrative sectors," he said.
Forouhar believes that the crisis in the petrochemical market that led to unusually high PET prices was the result of avaricious middlemen wanting to make a quick buck.
Following instability in forex market, the petrochemical sector has been in chaos, particularly PET, as most companies prefer to export instead of selling in the domestic market flooded with cumbersome rules, price restrictions plus corruption.
The extended shortages in PET supplies, which further jacked up prices, has forced some companies to cut output. That again made a bad situation worse.
The official added that an estimated 1.5 billion liters of bottled water is produced in Iran every year.
According to Mohsen Safaei, a board member of the Iran National Plastic and Polymer Industrial Association, petrochemical plants are interdependent and many could shut down unless they are provided with raw materials—hexanol, ortho-xylene, phenol and vinyl chloride—produced by other factories.
Nonetheless, huge fluctuations in the chaotic forex market has tempted companies to focus on export to increase foreign currency revenue, while a plethora of local producers (especially of key food products like vegetable oil) suffer from acute shortages.
Safaei added that several petrochemical complexes, namely Farabi Petrochemical Companyin Mahshahr, have been suffering from the lack of feedstock for long and cannot increase production despite rising demand. Moreover, the high and rising cost of imported raw materials is pushing the company toward insolvency.
Some experts say providing domestic companies, most of which are on the verge of bankruptcy, with the much-needed materials should be given priority over exports.
Iran's petrochemical revenues in 2017 stood at $12 billion -- a 25% rise compared to the $9.5 billion a year earlier.
