In an interview with local media, Abbasali Motavaselian highlighted
major challenges facing Iran’s downstream petrochemical sector, including
energy imbalances, regulatory inconsistencies, raw material shortages, and
inadequate investment in research and development (R&D).
“The lack of energy supply balance, inefficient regulatory policies,
and raw material constraints have weakened the competitiveness of domestic
producers, leading to the loss of significant value-added opportunities,”
Motavaselian said.
Energy Imbalances Undermining Downstream Petrochemical Growth
Motavaselian pointed out that Iran is facing severe energy supply
issues, with natural gas shortages reaching 280 million cubic meters per day
during peak consumption periods and electricity deficits causing widespread
outages.
“These imbalances not only affect industrial efficiency but also
threaten economic stability. The petrochemical sector, which relies heavily on
natural gas, has been one of the hardest-hit industries,” he noted.
He estimated that production disruptions caused by energy shortages
have led to an estimated revenue loss of $7 billion for the petrochemical
sector, reducing its attractiveness to investors and forcing many downstream
facilities to shut down.
R&D Deficiencies and the Need for Innovation
Highlighting the crucial role of R&D in driving industry growth,
Motavaselian cited global benchmarks showing that countries prioritizing
innovation have secured greater market shares.
“In 2023, U.S. companies invested $808 billion in R&D, with annual
growth in this sector reaching 3%. Meanwhile, Germany, despite lacking domestic
hydrocarbon resources, has leveraged innovation to achieve $12 billion in
petrochemical exports, securing a 9% global market share. In contrast, Iran’s
share remains at just 0.7% due to over-reliance on raw material exports and low
product diversity,” he explained.
He criticized Iran’s continued export of raw petrochemical materials
at low prices instead of utilizing them to manufacture high-value downstream
products.
“Currently, Iran’s upstream petrochemical production is twice the
demand of the domestic downstream sector. However, regulatory inefficiencies
and lack of structured policies have prevented the full utilization of these
resources for value creation,” he added.
Challenges in the PVC Industry and Investment Needs
Motavaselian described the PVC industry as one of the most volatile
polymer markets in Iran, with procurement challenges pushing buyers into
competitive bidding wars, sometimes inflating prices by up to 26%.
“PVC is a strategic material that supports over nine industries,
including healthcare, construction, automotive, and water infrastructure. In
industrialized nations, nearly 70% of building and infrastructure pipes are
made from PVC. However, supply chain inefficiencies in Iran have severely
impacted domestic producers,” he said.
He noted that the global PVC industry is shifting its investment
focus, with 80% of new production capacity in 2023 coming from China.
Meanwhile, demand for PVC-based pipe and fittings is expected to grow at an
annual rate of 6% through 2030, outpacing global economic growth and
highlighting the need for strategic investments in Iran’s downstream sector.
Private Sector’s Appeal to the Government
Motavaselian called for urgent reforms to rebalance Iran’s
petrochemical industry, arguing that misaligned development priorities between
upstream and downstream sectors have hindered the competitiveness of Iran’s
secondary petrochemical products in regional markets.
“With more effective government support, improved cooperation between
upstream and downstream industries, and a proactive economic diplomacy
approach, Iran can enhance its global standing by focusing on high-value-added
products instead of raw material exports,” he stressed.
He also underscored the critical role of NPC in fostering
collaboration between industry stakeholders, stating that previous instances of
close cooperation between associations and regulators had led to mutually
beneficial outcomes across the entire value chain.
“Utilizing collective industry expertise for decision-making will ensure
sustainable growth and strengthen Iran’s petrochemical competitiveness on a
global scale,” he concluded.