Challenges Remain for Iran Exports to Vietnam

Iran's Amir Kabir Petrochemical Company aims to export 5,000-8,000 mt/month of polyethylene to Southeast Asia in 2018, with Vietnam expected to be the main target market, Sales and Marketing Manager Daiko Abbasi said Friday on the sidelines of VietnamPlas 2017. "This is our first year participating in VietnamPlas. We see great opportunities in...

Iran's Amir Kabir Petrochemical Company aims to export 5,000-8,000 mt/month of polyethylene to Southeast Asia in 2018, with Vietnam expected to be the main target market, Sales and Marketing Manager Daiko Abbasi said Friday on the sidelines of VietnamPlas 2017.

"This is our first year participating in VietnamPlas. We see great opportunities in Vietnam, as the packaging and film grade consumption is increasing [in line] with its young population," Abbasi said.

Grades that are expected to see good demand include general purpose and heavy-duty linear low density PE, high density PE film, and HDPE pipe grade, he added.

"Our strategy is to bring large volumes of PE directly from Iran to Vietnamese traders, distributors and end-users, without going through intermediaries," he said.

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AKPC had sold smaller quantities of PE to Vietnam about two years ago, Abbasi said without elaborating.

Chinese traders have been heard reselling Iranian PE to Southeast Asia if netbacks were good, industry sources said.

AKPC operates a petrochemical complex at Bandar Imam with a nameplate capacity of 300,000 mt/year of LLDPE, 300,000 mt/year of LDPE, and 140,000 mt/year of HDPE, and is currently operating at "full rates," according to the company.

Banking restrictions, logistical uncertainties, and differences in resin preferences in Vietnam may pose challenges for Iranian PE exports, the manager at a major Vietnamese polymer trading company said Friday, citing ongoing negotiations.

"Getting a Letter of Credit for an Iranian cargo is not possible now due to banking restrictions, and with the current US administration, likely to become stricter in the future, not looser, bringing more risk to traders," the trader said, leaving telegraphic transfers as the only alternative.

Typical bulk PE shipments from Iran may be over 10,000 mt, with upfront cash payment required in excess of $10 million, which could lead to cash flow challenges, the trader said.

In addition, shipments from Iranian producers have been known to be delayed to up to two months or arrive all at once abruptly, creating financial and logistical challenges for the buyer, the trader added.

Polymer buyers typically have the option to receive large shipments over weeks or months.

"Iranian LLDPE typically has no additives, whereas the Vietnam market want additives. We need to make an extra effort to market to customers unfamiliar with Iranian products," the trader noted.

"Iran's competitors such as Saudi Arabian, South Korean and Taiwanese polymers are often comparable in price or better in quality and suitability to the Vietnamese market, faster at delivery, and have no banking issues," the trader said.

Iranian PE exports to Vietnam and Southeast Asia have been very small in the last few years, industry sources noted.

Vietnam polyethylene demand is estimated to be 1 million-1.5 million mt/year, according to traders and S&P Global Platts Analytics.

--Yi-Jeng Huang, yi.jeng.huang@spglobal.com
--Heng Hui, hui.heng@spglobal.com
--Edited by Geetha Narayanasamy, geetha.narayanasamy@spglobal.com

Source: www.platts.com