Low oil price threatens Iran's petrochemical sector


Aside from threats over Iran's yearly budget law based on $100/barrel of crude oil, the country may encounter another blow from low oil price - to its petrochemical sector.
The $100 oil price has both direct effect and indirect damage on Iran's petrochemical sector, by declining its shares value at stock markets. Iran's petrochemical industry accounts to 40-42 percent of the country's total capital market.
Capital markets are financial markets for the buying and selling of long-term debt or equity-backed securities.
The huge share of petrochemical industry in Iran's $156-billion worth capital market (1 USD/31,000 rials, based on open market exchange rate) demonstrates the importance of petrochemical industry in Iran's economy.
During the current year Iranian calendar year (started on March 21), the petrochemical units faced an index drop at the capital market, due to uncertainty in getting the crude oil and gas price set for them by the government.
Iranian government was supposed to revise the oil and gas prices for petrochemical units for several months already, but no decision has been made as of yet. This imposes a big threat on Iran's petrochemical sector, as the global oil price has been driven down from $107 in June to about $80 last week.
According to OPEC's statistics, the Cartel's oil basket price slipped below $82 per barrel on Oct.23, while this figure was about $108 in June.
The effect of declining oil price directly hits Iran's petrochemical industry, reducing the petrochemical products' prices.
Meanwhile, Iran aims to produce some $20-22 billion worth of petrochemical products in the current calendar year, $10 billion worth of which is planned for export. The remaining amount is planned to be supplied to the supplementary petrochemical industries.
Last year Iran produced $20 billion worth of petrochemicals, $9 billion worth of which the country exported.
Below is a table, comparing Iran's oil and gas products' value, exported last month and six months ago. The table is based on Iran Custom Administration's monthly reports:
Product
Last month
Per metric ton
Six months ago
Per metric ton
Propane
126,000 metric tons, $100 million
$793
209,000 metric tons, $211 million
$1009
Butane
81,000 metric tons, $68 million
$839
124,000 metric tons, $121 million
$975
Urea
251,000 metric tons, $80 million
$306
61,300 metric tons, $19.5 million
$318
Tar
182,000 metric tons, $92 million
$505
178,000 metric tons, $88 million
$494
Total petrochemical products
1.462 million metric tons, $1.022 billion
$700
1.011 million tons, $926 million
$915

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