Iran considering petrochemical imports after Israeli strikes hit output

Iran may be forced to ramp up imports of petrochemical products to supply feedstock for downstream industries after US-Israeli air strikes hit its main production hubs earlier this month, a government spokesperson said, in remarks carried by state news on April 16.

Petrochemicals are a key source of hard currency for Iran alongside the steel sector, which was also pounded in air strikes that damaged facilities at major producers, including Mobarakeh Steel in the central city of Isfahan and Khuzestan Steel in the southwestern city of Ahvaz. 

Ezzatollah Zarei, a spokesman for the Ministry of Industry, Mine and Trade, said officials had reviewed “necessary mechanisms” for securing raw materials for downstream industries in meetings with the National Petrochemical Co. (NIPC) and industry associations.

Zarei said the first step would be to boost output at petrochemical units producing similar materials. “If that is not sufficient, we will supply the required raw materials through imports so that downstream production units do not face problems,” he said.

Air strikes over several days damaged petrochemical facilities in Mahshahr in the southwestern province of Khuzestan and in Asaluyeh in the southern province of Bushehr, hitting installations at multiple companies.

The potential shift to imports comes despite Iran’s status as a major exporter. According to Oil Minister Mohsen Paknejad, the country exported 37.7mn tonnes of petrochemical products last year, generating $15.6bn in revenue.

NIPC has yet to provide an estimate of the damage, and it remains unclear how much of Iran’s nominal annual production capacity of 100mn tonnes has been lost. However, wider estimates of damage to the downstream sector in the country is estimated to be in the hundreds of millions of dollars. 

On April 15, Iranian media published an official directive issued by Mohammad Mottaqi, director of downstream petrochemical industries development, ordering a halt to all petrochemical exports “until further notice” to prioritise domestic demand and support local industries and consumers.

The directive also instructed companies to return export shipments that had not yet cleared customs to the domestic market to prevent shortages of feedstock for downstream industries.

It said domestic sale prices for petroleum, refining and petrochemical products must be “fixed” in line with a Supreme National Security Council order at international levels prevailing before February 28, when the United States and Israel launched a joint war of aggression on Iran.