Iran’s total trade, excluding crude oil export, stood at 16.14 million tons worth $8.06 billion in the third month of the current fiscal year (May 22-June 21).
According to the Islamic Republic of Iran Customs Administration, exports stood at 13.08 million tons worth $4.37 billion, registering a 52% and 30% growth in terms of weight and value respectively compared with the previous month’s (April 21-May 21) 8.58 million tons worth $3.35 billion.
Imports stood at 3.05 million tons worth $3.69 billion, registering an 8% and 1% decline respectively compared with the previous month’s 3.32 million tons worth $3.73 billion.
Iraq with $6.49 million tons worth $1.39 billion, China with 2.45 million tons worth $1.09 billion, the UAE with 1.03 million tons worth $426 million, Afghanistan with 475,000 tons worth $205 million and Turkey with 279,000 tons worth $205 million were the top five export destinations.
With the inclusion of liquefied natural gas exports to Iraq, the neighboring country was the top export destination during the period.
May 22-June 21 imports mainly came from the UAE with 1.11 million tons of goods worth $1.33 billion, China with 222,000 tons worth $729 million, Turkey with 307,000 tons worth $384 million, Germany with 83,000 tons worth $129 million and Switzerland with 113,000 tons worth $101 million.
First Quarter Trade
Q1 (March 21-June 21) trade stood at 38.38 million tons worth $20.9 billion, registering a 25% and 50% year-on-year growth in weight and value respectively.
Exports stood at 30 million tons worth $10.7 billion, registering a 38% and 69% growth in weight and value respectively compared with the previous year’s Q1. Imports stood at 8.4 million tons worth $10.2 billion, registering a 6% decline in weight and a 34% growth in value YOY.
The volume of goods transit through Iran in the first quarter of fiscal 2021-22 was 2.74 million tons, which shows an increase of 121% compared to the same period of last year.
Main export destinations in Q1 included China with 7.1 million tons of imports from Iran worth $3.1 billion, Iraq with 9.6 million tons worth $2.3 billion, the UAE with 3.4 million tons worth $1.3 billion, Turkey with 663,000 tons worth $595 million and Afghanistan with 1.4 million tons worth $570 million.
Main exporters to Iran during the period were the UAE with 2.5 million tons of goods worth $3.2 billion, China with 683,000 tons worth $2.2 billion, Turkey with 888,000 tons worth $1 billion, Germany with 239,000 tons worth $414 million and Switzerland with 472,000 tons worth $384 million.
Fiscal 2020-21 in Review
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).
Latest statistics released by Central Bank of Iran show that except in the months ending Oct. 21 and Nov. 20, Iran’s trade balance was neargely gative last year.
The two aforementioned months saw a trade surplus of $1.42 billion and $0.12 billion respectively.
The highest exports value was registered in the month ending 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 ending 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 decrease in Iran’s foreign trade in the fiscal 2020-21 compared with those ranging from the 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 curbed the purchase of raw materials for export products. Therefore, it caused a decline in export volume during the period.
Currency shock is another reason behind the decline. One of the main variables affected by currency shocks is non-oil exports.
Iran’s currency market faced an unpredictable shock in the fiscal 2020-21 due to the intensification of US sanctions, decline in forex 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 put sanctions on petrochemical industries and 39 related institutions, and its Department of Treasury banned the transactions, purchase, credit and insurance services of other countries with Iran.
Oil prices also impacted petrochemical export and due to the low oil prices in the fiscal 2020-21 alongside the US sanctions, petrochemical products registered a decline during the period under review.
The coronavirus pandemic was another reason behind the significant decrease in trade. Closure of borders, new standards for foreign trade and the wariness of other countries in buying 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 the European Union are shuttling between the US and Iranian delegations.
JCPOA limited the scope of Iran's nuclear program. In return, the Islamic Republic received relief from US and international sanctions. However, Washington walked out of the deal under the administration of former president, Donald Trump.
With the possibility of an agreement between the two countries and lifting of sanctions, some of these obstacles such as the US sanctions may be removed and there is an opportunity for Iran to develop and increase its foreign trade.
