Japanese trading houses such as Mitsui, Mitsubishi and Sojitz, offtake directly around 1.2 million mt/year methanol, 30-40% of Iran's production based on normal operating rates of around 80% or less, sources estimate.
Iran's methanol production capacity is around 5.06 million mt/year.
A small portion of this is exported to Japan. Iranian origin methanol accounts for 131,802 mt, or 12.3%, of Japan's total methanol imports of 1.07 million mt so far this year.
"I do not see a significant impact for Japanese companies. It depends how individual companies react. Every company has to make a decision," a Japanese methanol trader said Monday.
Methanol trade with Iran would not be directly affected by the sanctions as the Japanese government's guidelines do not restrict trade on methanol,sources explained. There might, however, be an indirect impact if banks or companies impose any restrictions as a result.
So far no Japanese banks have imposed any restrictions on trade with Iran and traders will continue to use the Japanese Yen for payments with Iranian business partners, sources said.
The Japanese cabinet Friday approved the imposition of additional sanctions against Iran and urged caution on investments and trade in the energy sector with the country.
Under the new sanctions, state-owned Japan Bank for International Corporation and the Nippon Export and Investment Insurance, or NEXI, will not enter into any new commitments for export credit running for two years or more in all trade sectors, including energy. The move will make it difficult for
Japanese companies to make any new investments in oil and gas projects.
Japan's methanol imports 2010 (main countries):
July 2010 (incl. July)
S Korea 5,817 8,812
Malaysia 26,435 189,728
Brunei 9,801 9,801
Indonesia -- 11,473
Iran 16,845 131,802
Saudi Arabia 32,253 552,823
Qatar -- 9,449
Oman 3,027 19,339
Trinidad&Tobago 1,697 4,683
Chile 4,268 36,419
New Zealand 19,877 96,297
Total: 120,020 1,070,633
(Units: mt. Source: Japan's Ministry of Finance)
