New US sanctions on Iran that target the petrochemical industry are likely to have a little impact on the European polymers market in the near term given the slow demand and surplus supply on the continent, sources said.
But the impact over the longer term is unclear, with industry players keeping a close eye on European governments' reaction and whether the latest sanctions will have a snowball effect in the region.
The UK early this week said it would cut all financial ties with Iran, including the central bank of Iran. France meanwhile is pushing the EU to halt oil imports from Tehran.
"These sanctions won't have much impact on European polymers, especially in a market [suffering from] oversupply and with crackers running at 70%," a trader said.
"It's not the first time that US imposed sanctions on Iran. The impact at the moment is more on the news, rather than the market," he added.
Another trader said the implications of the new sanctions remained uncertain.
"The consequence of the bank embargo is that Iran won't be able to export, as no one will be able to pay them. So, we'll have to wait and see," he said.
Other sources did not see the fresh sanctions having serious consequences for European polymer trading as it is already difficult to secure letters of credit from European banks to finance Iranian imports as a result of past sanctions.
Despite existing sanctions, Europe's imports of low density polyethylene from Iran have risen sharply over the past two years, reaching 171,486.3 mt in 2010 from 4,338 mt in 2008. In the first eight months of 2011, they totaled 53,796.8 mt, down from 55,958 mt a year earlier, latest Eurostat data showed.
Iranian suppliers were heard to be aggressively boosting their presence in Turkey, a major trading hub for polymers.
"At a recent plastics fair here, some Iranian suppliers have been selling large volumes into the Turkish market," a local trader said.
"I think Iran is targeting to sell to Turkey more," he said, adding some industry players in Turkey have managed to maintain relationships with Iranian firms despite the sanctions.
Iran has been Turkey's second biggest source of polymers, particularly polyethylene.
In the nine months to September, Turkey's imports of Iranian high density PE alone reached 81,531 mt, or nearly 18% of the total. Saudi Arabia was on top, supplying around 23% of Turkey's HDPE imports for the period, official statistics showed.
China is seen as Iran's preferred market for polyolefins, but Turkey is now becoming an increasingly important market as well, another trader said.
Freight from Iran to China is currently around $40-60/mt by vessels, which takes about four months of journey time, he said, adding that Iranian cargoes into Turkey were mostly transported by truck costing around $120/mt in freight and a week-long journey.