کد خبر 41025

In the short term, Iranian sellers were trying to remain optimistic, having dealt with similar trade restrictions only a few years ago

 Petrotahlil- LONDON (ICIS)--Turkish polyethylene (PE) and polypropylene (PP) players had hoped this year would be far less complex than the eventful 2017 when various political spats led to subdued price levels, but a slowing economy and global geopolitical developments have put a spanner in the works

After a strong start to the year, the Turkish economy has slowed down on the back of the depreciation in the lira, as well as the sudden call for a snap presidential election in June and a continued bullish foreign policy

The latest global political developments have deepened pessimism from many players on the market

Despite global condemnation, US President Trump decided this week to withdraw from the deal curbing Iran nuclear ambitions, a move which could lead to fresh sanctions against the country

Sources said the US President’s move would be negative for polymers in Turkey, although players views’ differed on how large an impediment to trade this would be

Although the US is alone in wanting to re-impose sanctions and the Turkish government is unlikely to stand with them, the sanctions could complicate matters for material leaving Iran

Turkish players were mixed in their initial reaction, with many pointing out that as banks had continued to refuse to offer credit for Iranian material, many buyers had been working around restrictions anyway

Strategies usually involve routing the material and/or payment through another country

"The embargo was lifted [post 2015 nuclear accord] but the financial system acted like if it was still there," said a trader

"Everyone was buying everything through Oman or Dubai"

However, there is some indications that international regulations are closing in on these back routes to trade

"We understand [that] a couple of Turkish banks being used in Iranian/Turkish business are under investigation," a source said

"So Turkish banks will be more careful"

Some players had a more relaxed attitude, pointing out that a raft of sanctions had been recently lifted, with the consequence that many in the market were already well used to dealing with the associated issues

"We get used to an embargo, nothing new," said a player

Despite this, there are already issues that are preventing straightforward trade between Iran and Turkey

The recent Iranian government decision to set a standard exchange rate has limited export opportunities as some buyers are not willing to engage at the set rate

"Official rate and the market rate on currency is a problem. Exporters don't want to accept the official rate," said a PP trader

Material had been moving between the countries in recent weeks but the prospect of US sanctions is already putting off some players, unwilling to risk becoming tangled in complex international trade rules

"I was planning to bring some Iranian materials to Turkey, but now am waiting. Don't want to face any problems," a source said

Once other participants in the nuclear accord such as Europe and China, who intend to remain in the agreement, are yet to set out their intentions, and this may ease nerves among market players

The Iranian president Hassan Rouhani is due to visit China this weekend, and the EU capital Brussels next week

That lack of certainty over the severity of fresh US sanctions is currently a major stumbling block

"There are a lot of US, European and Asian trading companies involved, so it is easier not to get involved," said one trader

For now, the long-term worry is that Iran is a major exporter of high density polyethylene (HDPE) and this would be difficult to replace in the short term

US sellers could potentially profit from this, with plenty of new PE capacity coming having recently come online

In the short term, Iranian sellers were trying to remain optimistic, having dealt with similar trade restrictions only a few years ago

Many have not been sending much material to Turkey recently due to weak demand and low pricing

The likelihood is that China will not restrict Iranian imports and it may become an increasingly important outlet for the Iranian petrochemical market, although the reality is likely to become logistically complicated for those on the ground

The overall complexity of interweaving global and local issues is starting to take an extended toll on the polymers market

One Turkish player summarised the sentiment of a beleaguered business community

"At the moment, we are sick of the political and economic situation," it said

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