There are no shipping companies with chemical tankers in Iran, and all the petrochemicals produced in the country are being shipped by companies from Asia primarily China, Japan, India and Singapore, the sources said.
Data recently released by Iran's Petrochemical Commercial Company, a conglomerate or several smaller companies, and Iran's largest exporter of petrochemicals showed that Iran exported 11.18 million mt of petrochemicals in the first nine months of 2010. The company had exported 11.55 million mt in 2009.
China imported 2.57 million mt of petrochemicals from Iran between January and September 2010; India imported 1.92 million mt. Far East Asian countries like Japan and South Korea imported a total of 1.84 million mt in the same period.
India's share of petrochemicals purchases from Iran grew 5% this year, and some of the largest importers of Iranian petrochemicals in the country attribute it to "the smaller shipping fleets that have emerged in the last two years."
"There are three or four credible shipping companies in India, but then there are hundreds of smaller companies that have emerged in the past two years," a company source close to Chennai-based Thirumalai Chemicals Limited, which till not very long ago, imported high volumes of orthoxylene from Iran, said.
There are no statistics published by the Indian government on the number of shipping companies in the country. However, the Altius directory, an information provider with offices in the US and India, puts the total number of Indian shipping companies at 200.
Much of the shipping capacity that's ferrying Iranian petrochemicals came on stream in early 2009, when the freight rates were at their lowest. These ships were ordered in early 2007 when the global economy was booming, and they came on stream in mid-2009.
According to estimates, the shipping world saw an addition of 20% of the then existing capacity in 2009. Large shipping companies with new ships then sold off their smaller vessels to smaller players.
In mid-2009 freight volumes plummeted 15-20% in Asia and the owners of these smaller fleets found it difficult to find customers.
But these players then found an opportunity to carry freight from Iran as the US continued to implement measures to stop exports from that country.
"These smaller players do not have any association with the US and do not find any difficulty in coming under US scrutiny," a Singapore-based shipping broker, who works for one of the world's largest ship broking group said.
"Citing the risks they undertake, they often charge a slight premium to the prevalent freight rates for transferring products from Iran."
So instead of producers in Iran chartering the ships, it is the shipping broker or the trader who charters the ship. "Even consumers do not risk chartering a ship for an Iranian cargo," a trader said.
The freight is transferred in chemical tankers with capacities of 15,000-25,000 mt as there are not very large shipments for an particular product. Besides, each tanker has compartments to carry several products.
"These products are offloaded at various destinations across Asia. So a tanker beginning its journey from Iran may offload some products in India, some in Indonesia and some in China," another Singapore based shipping broker said.
Payments for shipments are made in yen or in euro, another source said. "It has become difficult to import Iranian cargo in Japan, but it's not impossible. The Japanese find it easier to pay the Iranians in yen. Others are also using the same currency," a Japanese shipping broker said.
The difficulties arise when an exchange of information between an Iranian company and a importer is intercepted by US authorities. Even a single email exchange between an Iranian company and a shipping company can lead to problems for the shipping company, an industry source said.
Additionally, it is also difficult to find insurance for ships carrying cargoes from Iran. "Most of the credible insurance companies that insure ships are in the US or Europe, and these days they simply decline to deal with companies that do business with Iran," a shipping broker said.
The US, through various initiatives has constantly tried to squeeze the imports into and exports out of Iran since 2003 due to concerns over its nuclear program.
Recently, in early July, it tightened the noose with a new wave of sanctions.
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