EghtesadOnline: Recent rough patches in the petrochemical market are the result of middlemen rushing to make a quick profit.
Following volatility in primary and secondary forex markets, petrochemical markets have been in turmoil, particularly with regard to polyethylene terephthalate (PET), which is the raw material used in the production of water bottles, as well as oil and food containers.
Not only is the material gaining in value every day, but it is also in very short supply, IRNA reported.
The shortage in supply of PET, which added to the rise in price, has forced some companies to reduce their output. This is while PET producers dismiss all claims of underproduction, Financial Tribune reported.
Studies show that both the two groups are in the right, and that the main problem is posed by profiteers who are exploiting the current situation and violating the rights of consumers, buying raw materials cheap and hoarding them or selling them to neighboring countries.
After the US government pulled out of Iran nuclear deal, the surge in forex rate made the Iranian government turn to command economy policies, setting a fixed rate for the dollar at a much lower price than that of the open market. It then allocated dollars and euros to individuals and companies of choice. The allocations, however, caused corruption and led to the creation of a forex black market.
The Secondary Forex Market was set up as a solution to the mayhem caused by the state-issued dollar price, with the money changing hands at a price negotiated and agreed upon by the seller and buyer (closer to the black market rate than the government-issued one).
The secondary market does not seem to have stopped the profiteers, as they are buying raw materials from the producer and smuggling them out of the country instead of getting them to domestic companies that use the raw materials in production. The upheaval in PET market is one outcome of the profiteering.