From reckless policymaking to official warning to petrochemicals; Iran’s propylene market at risk

According to Energy Press, Iran’s petrochemical industry has experienced significant production growth in recent years, especially in the propylene sector. This trend, which has been shaped by the increasing need of downstream industries and the booming domestic market, on the surface indicates the successful development of this sector. However, the bitter reality is that without appropriate policy and strategic infrastructure, this growth is merely a temporary success that can easily fall apart.
At the 19th Iran Plast Exhibition, Hassan Abbaszadeh, CEO of the National Petrochemical Industries Company, officially warned propylene producers that they should move towards the development of downstream products; but in practice, this warning remained more in the form of a written recommendation and lacked an executive and binding guarantee. This issue indicates the depth of recklessness and lack of serious will in macro-petrochemical policymaking.
The crisis caused by excessive licensing and lack of downstream access
One of the fundamental and root problems is the issuance of excessive licenses without a precise strategy to establish production units that are only enough to produce the basic product and do not complete the value chain. These incoherent decisions not only cause premature saturation of the domestic market, but also make Iran vulnerable to powerful competitors such as China, which is advancing with careful planning and targeted support.
By employing more than 30,000 companies in the oil and gas value chain, along with tax supports, feed subsidies, and protective tariffs, China has quickly achieved complete self-sufficiency in the production of propylene and related downstream products and has established its position as a major player in the global market. In contrast, Iran’s fragmented and uncoordinated policies, lack of financial support, and lack of focus on value chain development have paved the way for backwardness and loss of value-creating opportunities.
Ignoring the production of high value-added products; missed opportunities and future threats
One of the important aspects of the development of the petrochemical industry is to focus on the production of downstream products with high value-added; products that can truly transform the country’s economy. In the meantime, the production of propylene oxide, as a vital product with wide applications in the food, pharmaceutical and chemical industries, is a strategic opportunity that, unfortunately, has not received enough attention so far.