Industry Forecast

Key View: Iranian petrochemicals production was undermined by sanctions in FY2018/19, leading to a sharp drop in exports and a
corresponding decline in petrochemicals plant capacity utilisation. The domestic market was lacklustre as the country has slid into
recession amid renewed US sanctions. the inflationary impact of the declining value of the rial and resulting investor wariness.

Other factors holding back production included lack of feedstock and maintenance turnarounds. which are likely to reduce in the
second half of the year. While capacity expansion continues apace. the growing risks and limitations of the Iranian petrochemicals
industry are likely to undermine capacity utilisation rates. However, we note the sector has overcome more significant challenges in
the past when it was under more stringent international sanctions and the sector is unlikely to go into recession.

Production

Flood damage to the West Ethylene Pipeline led to the temporary closure of several petrochemical plants in llam.
Kordestan. Kermanshah and Lorestan provinces from March. Heavy rainfall and 11oods caused serious damage to many provinces in
Iran. particularly Khuzestan and Lorestan. The impact was most felt by polyethylene production. which relied heavily on the pipeline.
At the time of writing. it was unclear when the pipeline would be f1xed and the plants brought back on·stream.