Credit Sales by Petchem Firms: Lifeline for Downstream Industries

Credit Sales by Petchem Firms: Lifeline for Downstream Industries
(Tuesday, May 6, 2025) 14:54

YAZD (NIPNA) – Mohammad Ali Mahlaqah, CEO of Granule Morvarid Yazd, has praised credit-based petrochemical sales as a crucial mechanism supporting the working capital needs of downstream producers, particularly over the past two years.

Speaking to NIPNA, Mahlaqah described the policy as a “vital artery” for production. “Credit sales have significantly boosted output across the petrochemical value chain,” he stated. However, he warned that the existing purchase caps imposed on raw materials at the Iran Mercantile Exchange (IME) present serious challenges to companies attempting to procure feedstock in accordance with actual production needs.

Granule Morvarid Yazd, established in 2002, initially focused on the domestic market. Over the last seven years, however, the company has shifted toward international markets, now exporting $14–20 million worth of goods annually to 6–7 European countries and 7–8 regional neighbors. Due to export restrictions, shipments to Europe are routed via the company’s offices in Turkey and the UAE.

Mahlaqah cited high transaction costs and logistical hurdles—stemming from lack of access to SWIFT and complications in altering shipping documentation for European destinations—as major obstacles. “These inefficiencies divert a significant portion of export profits to intermediaries in Turkey and Dubai,” he added.

On the import side, Mahlaqah highlighted the industry’s dependence on foreign additives. “Delays in foreign exchange allocation or customs clearance have a direct impact on product quality and global competitiveness,” he noted.

Despite these challenges, Mahlaqah acknowledged improvements in domestic feedstock supply, crediting recent policy initiatives with strengthening working capital flow. “Weekly credit sales by petrochemical companies have become a consistent support mechanism,” he said, pointing out continuity in these measures across successive management periods at the National Petrochemical Company (NPC).

He called for the removal of the IME’s purchase ceilings, arguing that such restrictions fuel market speculation. “When legitimate manufacturers can’t purchase directly due to quota limits, they’re forced to turn to brokers—raising costs and distorting the market,” Mahlaqah said. “Eliminating these ceilings would allow producers to meet their actual needs and curb arbitrage.”

 


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