The Iranian government has banned the export of petrochemical products, including polymers, as a measure to "support national production," the Islamic Republic News Agency said, quoting the country's Consumer and Producers Protecting Agency.
The list, which included polyethylene, polypropylene, polyvinyl chloride and PET, was part of the 50 industrial and agricultural products restricted for export sales.
The restriction also included wheat, flour, sugar, vegetable oil, soybean, aluminum, scrap iron, copper wire, car tires and steel products, IRNA said.
The news came as the US and Europe stepped up sanctions against Iran in an attempt to curb its controversial nuclear program. The West accuses the Islamic Republic of trying to build nuclear weapons, but Tehran says its nuclear program is aimed solely at generating electricity.
The export restriction also came on the heels of the severe volatility in the Iranian rial against the US dollar. The rial's dramatic fall since the start of the year following the sanctions has made imports more difficult and expensive.
BAN WON'T APPLY TO PRODUCTS AT IRANIAN PORTS
Sources said the Iranian government has sent a letter to exporters of Iranian petrochemicals around five days earlier ordering them to withhold shipment of polymers.
The ban will not apply to materials that are ready for shipment at Iranian ports, they said, but added that no new deals can be made to export these products, with immediate effect.
"About 2,700 containers of various polymers are currently waiting at the port of Bandar Abbas and are to be transported to destinations in India by IRISIL [Islamic Republic of Iran Shipping Lines]. The Iranian government officials have clarified that these cargoes will not be stopped from leaving Iran," a Dubai-based trader said.
"The impact of this order will be evident only after a month's time," he said.
PETCHEM COMPANIES OPPOSE BAN
But the move faced opposition from the domestic petrochemical industry, sources said, adding that a group of Iranian producers and exporters have approached the government asking that the ban be scrapped.
"We are waiting for a response from the government," a trader said.
A Turkish trader also confirmed that petrochemical companies have asked the Iranian government to lift the ban, which he believed was an attempt by the authorities to get a grip on currency.
"We think this will just be temporary. It will be a big problem for them if they don't export their surplus production," he said.
In Turkey, the ban drove spot prices of polyethylene higher, sources said Wednesday.
High density polyethylene price offers increased to $1,510-1,520/mt CFR Istanbul following the announcement, a trader said, adding that Iran is one of Turkey's major sources of PE imports.
"Demand, however, is lousy in Turkey, so the offers might not translate into deals," a Turkish source said.
Iran exported 114,370 mt of HDPE to Turkey in the first eight months of 2012, and 104,884 mt in 2011, industry data showed.
"The domestic production in Iran for HDPE is about 1.3 million mt/year, while the domestic consumption is only about 300,000 mt/year. Figures show that ban will not be in place for long," a source said.
The ban will have limited effect on the polypropylene market in Turkey, traders said, adding that Saudi Arabia is the country's major source of PP imports.
Turkey's imports of Iranian PP homopolymers totaled 25,411 mt in January-August, though monthly data has fallen from the year's peak of 7,587 mt in April to 1,119 mt in August. Saudi Arabia, meanwhile, shipped 360,606 mt during the period, or 45% of Turkey's total imports of 798,026 mt.
