A review of the first 6 months of the Iranian year over a period of seven years at the Petrochemicals Forum of Iran Stock Exchange for petrochemicals shows that markets are returning to equilibrium, although they are now also experiencing a general rise in prices, which has attracted industry and market growth. Almost new prices have gone into the financial accounts of the total and related industries and consumers.
According to the experts, it is important to examine the trend in question as the current economic conditions of the country have changed in recent years and diverse economic data and different conditions have dominated the various markets. In the petrochemicals market, due to the higher volatility and higher turnover of the polymer market, we have examined these products considering that the chemical market has experienced a relatively similar situation to this market.
Studies show that the market is struggling to return to pre-crisis conditions in the Hall of polymer products at the Stock Exchange after the sharp fluctuations that occurred in the first half of the year. For example, supply volumes have reached a balance of 2 million tons, which was a relative average in the first six months of the previous years, with trades returning to an average of 1.3 million tons. But there is a noticeable drop in demand. Demand has been experiencing a relatively emotional trend in recent years. Each year in the first half of the year we saw demand exceeding 3.5 million tons, but this year this was not the case and the registered demand on the stock exchange was not more than 2 million tons.
There are two main reasons for this: The first reason that matters most is the realization of prices on the stock exchange. The prices of various commodities on the stock market in the past were often significantly different from those of free market prices, which greatly facilitated speculation. In fact, demands has been higher in most of the years surveyed, part of this gap being attributed to speculative activity caused by price differences.
But last year, in the face of currency problems, the government had to shift pricing to the “NIMA” system currency and lift competition’s ceiling in commodity trading, which lead to the collapse of speculative demand and what remained was real demands. The second issue is the return of the recession to the country’s economy. Over the past few years, the demand for commodity markets has been declining as the economic growth has slowed. In the year 2015 that Iran’s economic growth was -1.6%, the 6.5 million tons demand in 2014 declined to 2.55 million tons. Forecasts of economic growth for the current year are also negative, with the country’s growth in the spring quarter being 0.4%. As a result, demand for raw materials, including polymer products, has also fallen.
As a result, these two effects have reduced demand by 6 million tons compared to the first half of 2018 and 1.1 million tons compared to the first half of 2017. Other economic data show that the current path to the underlying markets is reasonable and that we may even experience a decline in the current trend in the second half of the year.
PIMI can interpret this demands reduction a positive trend for the polymer market due to the fact that the volume trading will be the true needs of the converters which lead to the cheaper prices in near future, also with decreasing the speculations.
