Susceptibility to supplies from China is one of the major concerns

In the past and present there have been times that the reliance on the imports of China have cost the end-use industries dear and for several intermediates and fine chemicals globally the closure of several units in China had led to soaring prices and have also caused delays and disruptions to production which was schedules here. According to one of researched report, the pharmaceutical industries in India have time and again been grieved, as the susceptibility to imported raw materials such as active pharmaceutical ingredients (APIs) and their intermediates are mostly from China.

Moreover, squirts in prices were recently seen in some naphthalene-based dye intermediates like H acid and in China its derivatives was attributed to closure of several manufacturing units.

As per the industry experts, to the chemical industry or to India the dependence on China for import of key raw materials is not only one of its kind and nowadays in the global market, China controls more than 80%. However, the reliance on imports from China is a contemplation of the developments in that country and to create an enabling framework the changes in the Indian pharmaceutical, agrochemical industries and the collective failure of policy makers are here, which will look after a much larger Indian fine chemicals industry.

As per the researched report, the shift in focus of several majors in pharmaceutical and agrochemical markets of India is one of the major reasons for the growing role for Chinese producers in these two industries. Nevertheless, for APIs, technical agrochemicals and their intermediates most of the Indian producers have evacuate their manufacturing base in order to focus on the part of the value chain which will bring them the best value.

On the other hand the leading Indian pharma companies have still continue to make APIs and have got lot more careful about their product line up and have opt to outsource or import the rest. Similarly, leading companies in agrochemicals are also putting more awareness to get their products registered and acknowledged amid farmers.

However the sway of China as a supplier of key raw materials not just to India but to the global pharmaceutical industry is dubious to moderate sooner, in spite of anxiety expressed on this count.

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Global petrochemical prices slumped by 4 per cent in October

The $3 trillion-plus global petrochemical industry witnessed a 4 per cent fall in October as upstream energy prices continued their downward spiral. Petrochemical prices fell from $1,384/mt in September to $1,324/mt.  On a year-on-year basis, petrochemical prices slipped 2 per cent from the same month in 2013.

Prices have fallen 10 per cent since October, around $8/mt a day, after a short period of price rise. The steep decline in prices comes at a time when crude and naphtha prices have also been falling. Brent prices declined by 10 per cent in October, while naphtha prices fell by 15 per cent.

Petrochemicals are used by a large number of industries, including construction, pharmaceuticals, aviation, electronics and are used to make plastic, nylon, rubber and other consumer goods.

Prices of olefins, hydrocarbon compounds that function as the building blocks to petrochemical products used to produce consumer products, also declined in October. Ethylene prices slumped by 6 per cent to $1,324/mt, while propylene prices fell by 1 per cent to $1,311/mt.

Polyethylene also slipped by 2 per cent in October and polypropylene prices slipped by 1 per cent during the same period.

Aromatics are scented hydrocarbons with benzene rings. Prices of this compound fell steeply in October. Benzene prices declined by 7 per cent to $1,181/mt, while toluene prices dropped 8 per cent to $991/mt and paraxylene fell by 12 per cent to $1,603/mt. The paraxylene market registered the largest fall.

The falling petrochemical prices were accompanied by a sluggish global equity market. The Nikkei 225 and Dow Jones Industrial Average saw a rise of 2 per cent in October and the London Stock Exchange Index fell by 2 per cent during the same period.

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Sanctions against Iran persists, Britain will not encourage Iran trade

In the conference which was held on 15^th – 16^th October, 2014 is noted as one of the largest gathering of Iranian commercial officials which takes place in London. The conference which took place last month in October, 2014 aim to attract capital, which Iran badly needs owing to its long isolation under international sanctions. On the other hand, as world powers endeavor to achieve a deal with Iran on its nuclear programme sooner than its deadline on 24^th November, 2014, the Europe-Iran Forum is being held at a politically susceptible moment.

According to the sources, Britain still does not persuade to trade with Iran and has withdrawn all the commercial support for trade, in spite of an easing of tensions, since Iranian President Hassan Rouhani has sighted as a realistic member of the clergy, in 2013 it succeeded the fiercely anti-Western Mahmoud Ahmadinejad.

Nevertheless, the country wants to diversify beyond pharmaceuticals to oil from technology to everything, amid a population of close to 80 million and more of its young people going into higher education.

According to one of the researched report, in the year 2015 the Iranian economy in the current fiscal year will rise up to 1.5% mounting to 2.2% and this rise marks a ricochet from a 1.9% decline in 2013. But before the sanctions bit it remains far from 5% growth rates achieved.

Nevertheless, isolation of Iran remains far over for all the improvement in the diplomatic mood under Rouhani. Last year in 2013, Tehran struck a preliminary nuclear agreement with the world powers which is known as the P5+1 (the United States, United Kingdom, Germany, France, Russia, and China, facilitated by the European Union), endearing a limited slackening of the sanctions. However the country made a little progress before the deadline on reaching a final settlement was being discussed in New York in the month of September, 2014.

According to the industry expert, a major investment attraction is being represented by Iran through a liquid and well-developed stock market and diversified economy, however this achievement of Iran might take some time.

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Petrochemical industry to facilitate storing solar energy

A new study has shown how electrolysis (the process of passing via water to separate hydrogen from oxygen in H2O) electricity could generate hydrogen to store renewable energy. The solar panels would provide extra electricity for electrolysis, producing hydrogen in the day. At night the hydrogen generated would be combined with oxygen in the air to produce electricity.

Chemical engineers at Stanford have modelled a catalyst that could possibly enable producing large amounts of pure hydrogen by means of electrolysis. Currently, pure hydrogen is derived from natural gas; industrial hydrogen is mostly used for petroleum refining and fertilizer production.

The research team intend to use electrolysis to derive H2 from water and then use the process to conserve solar energy. However to make this method industrially successful the research team must come up with a cost-effective way.

Electrolysis is typically a simple experiment: place two metal electrodes in water, and pass electricity through these electrodes which makes them acts as catalysts to split water molecules into hydrogen and oxygen gas. Platinum is a perfect catalyst for water-splitting process. However to transform this method into an industrial process a low-cost electrode must be used. Thus the aim of the research team is to make H2 without using precious metals.

The team intends to go further than using electrolysis to replace the existing demand for hydrogen. At present there is no economically viable and large-scale method to store solar energy. This research team thinks that electrolysis could convert gallons of water into batteries for preserving solar energy. With the help of electricity, electrolysis will break the chemical bonds that hold H2O together.

Breaking the chemical bonds of H20 will result in the production of a hydrogen ion- a proton with no electron to create a balance. A good H2 catalyst will provide the proton with a place to stick until it can use an electron to form a hydrogen atom on the catalyst surface and then combine with a neighbouring hydrogen atom to come off as H2. This method needs a catalyst with the right stickiness because if the binding is not strong then the ions wouldn’t stick and if the binding is too strong then the ions will never be released.

Platinum is the best catalyst but is quite expensive. In 2013, the Stanford engineers came across a type of molybdenum sulphide, typically used for petrochemical processing, that had some of the properties to act as a cheap yet effective alternative to platinum.

Petrochemical processing has certain similarities to electrolysis as petroleum feed stocks consist of a substantial fraction of heavy molecules. Petroleum refineries rely on catalytic reactions that use hydrogen to break these heavy molecules into lighter molecules.

Electrolysis also involves breaking water molecules or their chemical bonds. However, the researchers soon found a better way of producing hydrogen from water.

Petroleum processing includes scrubbing sulphur out of fuels in order to reduce acid rain, during which some of the sulphur atoms get integrated into petroleum processing catalysts, thereby boosting the activity of the catalysts. This scrubbing process armed the team with another idea- if they added sulphur atoms to a good catalyst, it would function as a better electrode for generating pure hydrogen.

The team decided to lace molybdenum phosphide with sulphur atoms, which resulted in the production of a new catalyst molybdenum phosphosulfide. This new catalyst was much more effective at creating hydrogen than its precursor. This catalyst was much more resilient, which is an extremely important property for a catalyst used in an industrial process. This new catalyst is also stable and has the efficiency similar to that of platinum.

Now the team at Stanford is trying to further improve the catalyst. The team has been relying on environment friendly methods, but these methods have been developed on the basis of concepts borrowed from petrochemical plants.

It is enthralling to see researchers link two totally different areas of technology for such a noble purpose.

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Demand for oil tumbles on the back of weak demand

Industrial output in Germany dropped in August, the lowest since January 2009, putting pressure on European equities and leading to weak demand for oil. Europe and China are experiencing stagnation, thereby making it difficult for the oil price to climb up.

The US Energy Information administration (EIA) made a discouraging forecast, which added to the bearish sentiment. Brent November crude fell $1.03 at $91.76 per barrel, while Brent dropped to a contract low of $91.25 on Monday. US November crude oil fell 96 cents at $89.38.

Iran has declared that OPEC does not intend to hold an emergency meeting to deliberate the drop in oil prices. OPEC oil ministers are slated to meet in Vienna on November 27 to consider making adjustments to their output of 30 million barrels per day. Unless OPEC doesn’t take measures to reduce supply, oil prices will likely remain under pressure.

Brent crude long futures and options positions on the Intercontinental Exchange fell by a sixth in the week to September 30, which points to the fading investor expectations for higher prices.

US crude oil output has risen over 3 million barrels per day since 2010 amidst a global economic slowdown and increase in efficiency has limited growth in oil demand. Experts suggest that the current oil market scenario represents the effect of the colossal rise in US oil production.

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Toxic chemicals used in lotions may prove harmful for human health

In today’s generation many people are found using various types of cosmetic products on to their skin for a softer, fairer and smooth skin. With the upcoming of different brands most of the individuals nowadays prefer to pick and choose the best brand for their skin. However, they are not aware of harmful chemicals such as toxic chemicals used while making the cosmetic products, which at a later stage can destroy overall health. These toxic chemicals that are being used in the products can cause disease like tumors and cancer, and also cause dryness and irritation to the human skin.

Nowadays, most of the branded companies have come up with various lotions for smoother, softer and moist skin throughout the year and for all types season. The uses of hand or body lotions are mostly seen during winter as less moisture is present in air.

According to reports, in today’s world apart from various cosmetic product lotions have also become an essential accessory, which is applied several times a day. Moreover, lotion is basically prepared to treat the unbroken skin which reprieves the skin short term only. However in the long run, it in fact makes the problems worse as number of hand lotions contain toxic chemicals which over a time period get accumulated in increasingly greater amounts in the fatty tissues and liver and thus cause problems in long term.

Most of the lotions are a mixture of oil-in-water with a use of a matter such as cetearyl alcohol, to keep the mixture together, however the water-in-oil lotions are also formulated. Most of the common chemicals which are found in commercial hand lotion consist of mineral oil, parabens (propylparaben, ethylparaben, methylparaben), alcohols, aluminum and other petroleum products which are known to cause skin irritation and dryness. These chemicals that have been applied via lotion onto the skin are absorbed directly into the blood stream.

Toxic chemicals like Paraben and Petroleum affect the overall health of human bodies causing disease like cancer and tumors. Paraben chemical which is used in lotions gets accumulated in the human body affecting the liver, breasts and fatty tissues and are also known for causing dry, irritation and sensitizing skin and also triggering allergic reactions.

Whereas according to the researched studies, cancerous tumors and long-term dryness of skin are caused by petroleum chemical. As per analysts, quite a number of people don’t bother to go through the ingredients list on their cosmetic and other products.

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Does chemical Triclosan in Colgate Total lead to cancer-cell growth?

Triclosan is said to cause cancer-cell growth and disrupted development in animals. Thus, is it safe to put chemical triclosan in soaps, toys, toothpastes etc. Let’s find out.

Consumer companies are gradually stopping the use of this harmful chemical. However, millions continue to be exposed to triclosan put in toothpastes like Colgate-Palmolive Co.’s Total. Colgate asserts that Total is safe and that the product underwent rigorous Food and Drug Administration process that led to the toothpaste’s approval in 1997 as an over-the-counter drug.

However, FDA recently published Colgate’s findings on triclosan which proved that FDA’s drug approval process is based on company-backed science to show products are safe and effective. This report made experts question the company’s research on triclosan.

The study showed fetal bone malformations in mice and rats, which was put aside as irrelevant by Colgate. However, such findings when viewed in terms of today’s science may prove that triclosan is capable of disrupting the endocrine system and affecting hormonal functioning.

Colgate continues to defend the effectiveness of its product. Colgate spokesman Thomas DiPiazza said, “In the nearly 18 years that Colgate Total has been on the market in the U.S., there has been no signal of a safety issue from adverse-event reports. Colgate also pointed to an independent 2013 review by the Cochrane Oral Health Group, a network of doctors, researchers and health advocates, which found no evidence of harmful effects associated with using Colgate Total.” The safety of this product is supported by 80 clinical studies involving 19,000 people.

The FDA is reviewing safety information available on triclosan in hand soaps and not in Colgate Total as triclosan hasn’t been proven superior to soap and water at washing hands, however its effectiveness as an ingredient in toothpastes has been made clear through its FDA approval process. FDA, however, is positive that triclosan doesn’t pose a cancer risk for humans.

Colgate stopped use of triclosan in its Softsoap liquid handsoaps and Palmolive antibacterial dish liquid in 2011. Triclosan is the most scrutinized chemical since it is now used in nearly 200 products including rugs and pet-food dispensers. Firms like Johnson & Johnson, Avon Products Inc. and Procter & Gamble Co. have decided to remove triclosan from their products.

Consumers have turned away from chemicals like Bisphenol A and phthalates and have become much more aware about toxicity ranking.

At the end of the day it is the manufacturer’s responsibility to assure that its product is safe and to provide consumers with relevant information.

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Indian agrochemical market to reach USD 7.5 billion by 2018-19

After Japan, United States and China, India is noted as the fourth largest producer of agrochemical globally and for the Indian economy it is also a significant industry. According to the researched report, in the year 2013 the domestic crop shield industry stood at USD 2.1 billion which has in turn over the five years has grown at around 8% compound annual growth rate (CAGR). In addition, the exports of Indian agrochemical have boost around 17% compound annual growth rate (CAGR) to USD 2 billion, in compare to last five years and had reported for nearly 50% of the total production.

In the fiscal year of 2013-14 the Indian agrochemical market has been estimated at USD 4.25 billion amid exports consisting 50% of the market and in order to reach USD 7.5 billion by the fiscal year 2018-19 it is projected to boost by 12-13% per annum, according to the report released by the Minister of Chemicals & Fertilizers, Ananth Kumar.

In the Indian economy the agrochemical industry plays an important role and is also noted as one of the key component of the speciality chemicals industry. Moreover in India, with the rising demand of dilapidated farmlands and food grains, have increased demands on farm yield enhancement and diminution in crop losses due to pest attacks.

According to one of the researched report by the fiscal year 2017 the crop protection market is expected to boost at around 12% per annum to reach USD 6.8 billion as in the past the crop protection market has experienced a sturdy growth and the demand of export will be largely driven as it is anticipated to grow at 15-16% per annum and at the same time as it also expected to boost its domestic demand by 8-9% per annum.

Moreover in India at present bio-pesticides is the only pesticide market with overall 4.2% and in the near future, it has been projected to reveal an annual growth rate of about 10%. According to the Chemicals & Fertilizers Minster few pesticides which has been banned in the US, could be ban in India also and by increasing the usage of bio-pesticide these have several advantages over conformist pesticides. As they are by and large intrinsically less toxic than conformist pesticide and target pest are normally affected by these chemicals, which are closely related organisms.

In terms of low awareness among farmers where approximately 25-30% of farmers are aware of agro products, Indian agrochemicals industry faces challenges in spite of strong growth drivers and for the industry players, large number of end users reach across the managing inventory, geography & distribution costs is also a challenge.

In past few years the growth in local demand have been outpaced due to exports of agrochemical from India and is now reckoned as one of the leading suppliers  of quality technical agrochemicals at attractive pricing, like Indian pharmaceuticals industry. However, few long term trends in the Indian industries will be posed by new challenged.

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Asian Petrochemical firms are switching over to LPG

Petrochemical firms based is Asian region are planning to switch to liquefied petroleum gas (LPG), by retooling plants to store and building tanks, also from the US the imported LPG is being processed. Moreover costlier naphtha as a raw material that has been traditionally used by number of Asian petrochemicals firms will be replaced by the shale gas boom.

According to the industry experts, the reason behind switching to LPG is due to raise in the supplies of the U.S. that has pushed the prices lower than those of both naphtha and LPG from their major supplier the Middle East.

Over the next one to two years few major Asian petrochemical companies such LG Chem, Samsung Total Petrochemical and Royal Vopak are expanding their import terminals or retrofitting plants s they buy more of LPG and moreover to formulate a broad range of consumer and industrial plastics gas is being used by most of the petrochemical firms. However

According to the sources, at a time whilst global trade is still recuperating from the after effects of the financial crisis, buying of LPG will somehow help the United States spruce probable surplus of the gas and also give more business to shipping industries. Since June, 2014 most of the Asian petrochemical firms based in Thailand, Japan, Taiwan and South Korea have collided up their use of LPG, as the gas has charged at least USD 50 a ton less than naphtha, as per the market players.

Moreover as per the researched report, since the month of June, 2014 the usage of LPG done by the Far East is 350,000 to 400,000 mt in compare with a large amount of 250,000 to 300,000 mt a month in the past.

Furthermore, as a part of a cost-saving feedstock as a part of Shale boom a new Chinese petrochemical plant schedules to use growing exports of U.S. liquefied petroleum gas (LPG), joining other plants on east coast of China. Additionally around USD 8 billion petrochemical complex in Huizhou city by major Chinese energy giant CNOOC Group aims to use US LPG and also South Korean based major petrochemical firms will build LPG tank, wherein nearly 40,000 tons of LPG tank will be built by Samsung Total to traverse on the shale boom.

Another major South Korean based Petrochemical producer LG Chem, after the October, 2014 scheduled maintenance turnaround at its Yeosu complex, the company will raise the LPG volume used by its crackers by half to 66,000 tonnes. Likewise, a Dutch company that stores and handles various oil and natural gas related products Royal Vopak N.V. will also build an LPG storage facility to give petrochemical manufacturers a substitute to naphtha with an initial capacity of 80,000 cubic meters, as per the researched report.

Hence as per the LPG trader, due to the amount of supplies available the prices of LPG prices should be more cutthroat against naphtha.

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World fears an oil crisis

The political tensions in oil-producing nations, especially in Iraq and Libya, have sparked fear of oil shortage. The global market is worried that oil supply from Iraq may stop at any moment, which will lead to a huge rise in oil prices. If supply from Iraq halts then oil prices will easily reach $130 per barrel.

The suspension of production will equal 3.3 million bpd of Iranian oil supplies and 1 million bpd of Libyan supplies, including weak oil exports from Syria, Egypt and Yemen. Thus, the shortage of oil hit 5.4 million bpd, equivalent to the total oil surplus capacity of the OPEC countries.

 

The demand for oil at present is at its peak, specially in Gulf oil-producing nations where consumption has reached 10 million bpd. Consumption also increased in Iraq, Egypt, Iran and Indonesia.

Majority of the oil dependent nations rely on the rise in Iraq's crude oil production to over 8 million bpd by 2018.

These facts explain the state of fear experienced by oil-producing and oil-dependent nations, especially considering the decision of international oil firms operating in Iraqi oil fields to withdraw their workers. This will lead to a delay in the rise of crude oil production and also cause a surge in oil prices.

The US shale gas revolution as well as the easing of sanctions on Iranian oil exports have prevented tremendous increase in oil prices. These two factors will continue to prevent a rise in oil prices if Iraqi exports are suspended, however the world will lose a major source of cheap energy.

Losing the largest and most important source of oil will put more pressure on oil-producing nations to maintain a steady supply of oil. However, this pressure will arise from consuming countries other than the United States, as they will continue to invest in shale as long as the price per barrel is over $90-$100.

The rise in oil prices will be inevitable if crude oil supplies from Iraq to the outside world are suspended. The need of the hour is to conduct more research and exploration of new oil field and wells

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Crude oil prices sold by ISil from the capture oilfields between Iraq and Syria

A colossal swathe of territory between Syriaand Iraq that is control by the Islamic State of Iraq and Levant (Isil) is reportedly selling crude oil from the seizure oilfields on the black market at less than half the global international prices, earning themselves over £1 million/day, according to the industry experts from the Middle East. As on 22^nd August, 2014 the existing market price for a barrel of Brent Crude that is a foremost standard price for oil that is purchased worldwide stands at approximately around USD 102/barrel and their crude oil sold by the Isis militants is between USD 25/barrel and USD 60/barrel.

Moreover, the global oil prices had lingered unpretentious in spite of the black market oil supply generated by Isis, as quantities traded in the black market are minimal. According to the industry experts, in Iraq around seven oil fields and two refineries and also in the eastern provinces of Syria around 60% of oil fields are begin allegedly controlled by the Isis militants.

Furthermore the crude which is being transported to Iran via Kurdistan, Jordan via the Anbar province, Kurdistan region of Iraq, local market of Syria and Turkey via Mosul are also begin controlled by the militants apart from controlling a number of smuggling routes. However, in comparison to 9 million barrel/day from Saudi Arabia, the ISIS militants are reportedly smuggling around 30,000 barrel/day of oil.

Despite the fact that the capacity is small, it is disquieting and noteworthy and through the sale of oil it is able to generate almost USD 2 million/day and also finance its operations. Since the territory is under ISIS control, the regions between Iraq and Syria have become apparent as the ideal black market to sell the oil.

Nevertheless, the countries such as Turkey have overlooked towards the practice and in the Southern region of Turkey, pressure from international ought to be accumulate to wrap up the black markets, however historically the Southern region of Turkey, Eastern Syria and Northern Iraq is well-known for smuggling.

According to the sources, if the ISIS can cope up to lynch on their vast other than fragile holdings, it can pull in over USD 700 million/year in the course of a amalgamation of smuggling crude oil and smaller quantities of refining itself at its refineries in Syria as projected by few experts. As per the industry experts, during winter in Eastern Europe the demand for black market oil is expected to reach your zenith and in the coming weeks Isil is prone to thrust in more oil.

As the Southern region of Iraq is its dominant producer the collision will be minimal in the short to mid-term, however oil trading by ISIS so far has remained local with buyers in Syria, Jordan, Iran and Turkey via truck owners and middlemen network.

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Saudi crude production to remain high in 2014-2015

Saudi crude production, according to a recent report, will remain high in 2014 as well as 2015.

This report is based on OPEC outages, geopolitical crisis (Libya, Ukraine and Iraq), rising domestic use from the power and transport sectors, growing demand from the refining sector as well as the improving global economy.

The report suggested that the outlook for gas looks bleak, in spite of efforts and plans to tap unconventional resources. The increasing consumption and tight supply may force Saudi to consider imports.

Saudi oil reserves are expected to increase as much as 273 billion bbls by 2017, but may decline to 265 billion by the end of 2023.

 In 2013, Saudi had planned to add 160 billion bbls in additional reserves in the coming years.

The Kingdom has succeeded in maintaining high oil production levels and exports in the first half of 2014.

Experts suggested that crude oil and lease condensates production will stay at current levels throughout the current year.

2014 will see production of nearly 9.78 billion bpd, an increase of 1 per cent from 2013 production levels, but lower than output in 2012.

2015 will likely see a decline in oil production, at 9.8 million bpd.

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Europe’s economy in a fragile state

The fragile economy of Europe is likely to be affected by the never ending conflicts in Ukraine and Iraq. While, the economies of Britain and the US grow strongly, output in the euro bloc has come to a standstill. Germany is losing its hold and Italy is plagued by recession.

The global markets have been affected by the sanctions fight between Russia and the West as well as the US air strikes to stop Islamist militants in Iraq. The sanctions war between Moscow and the European Union and the growing concern over Russia’s invasion of eastern Ukraine have slowed down the economic growth.

Moscow supplies nearly a third of the European Union’s gas needs, Europe has strong trade ties with Russia. Thus, the increasing political conflicts in Ukraine and Iraq could have a major impact on the already weak economy of Europe.

Europe’s sluggish economy may help the US come to the forefront. Investors will test the strength of US rebound, while others are in search of reassurance that the recovery will stick even when central banks make borrowing expensive.

In Britain, unemployment rates may decline but earnings are expected to be lower than the previous year. The situation is similar in the United States. The cost of living is much higher than wage growth.Thus, to trust the recovery of the economies of the US and UK, wages need to rise in line with credit.

China’s economy has witnessed improved growth in the second quarter as the government has taken steps to improve construction of railways and public housing. However, the declining property prices and the high local government debts are slowing down the economy. The government will have to bring in deeper reforms to help push the economy forward. 

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Iranian government announces new economic policy package

The Iranian government recently announced its new economic policy package to help the country emerge from stagflation. This policy is focused on expanding domestic demand, resolving financial shortages and obstacles faced by the country as a result of the western sanctions.

The government is also looking to improve Iran's economic efficiency, especially considering the access to limited resources.

The government plans to boost the economy through a number of financial and foreign exchange policies, and at the same time improved ease of doing business will also help develop the economy.

The new economic policy will help stimulate economic growth through channeling economic resources towards the most efficient economic sectors in order to boost exports and reduce dependence on oil revenues. It focuses on four main areas-

• Macroeconomic policies

• Policies on ease of doing business

• Financial policies

• Economic stimulants

The government has been working toward reducing the rising inflation through monetary regulation and macroeconomic stability. The new policy has helped the government reduce inflation over the past 12 months from 37.5% to 27.7%.

The dual currency exchange system has impacted the economy, which the government hopes to resolve by stabilizing the currency exchange regime and bring down costs in the manufacturing sector.

The government hopes that stable currency and predictable inflation could lay the foundation  for macroeconomic stability.

The new economic policy will focus on eliminating dual currency exchange regime, lowering currency exchange regulations and improve the flow of foreign investment.

Financial restrictions by the banks in their lending to the manufacturing sector has also affected growth, primarily becuase of the increasing government debt.

The repayment of debt could help boost credit expansion and domestic production.

The government is planning to improve ease of doing business through less intervention in the market in terms of pricing goods and services. SMEs have had restricted access to financial resources and bank credits. Thus the banking and credit policy included in the new policy will help regulate the banking sector.

Non-oil exports will help improve domestic demand and reduce dependence on oil revenues and diversify the country's financial resources.

The oil, gas and petrochemical sectors hold a crucial position in the Iranian economy. Backward and forward linkages with several sectors across the economy could help boost production and growth.

This new policy will put emphasis on boosting energy production and consumption efficiency. The Iranian government has adopted the following policies-

• Investment in roads and public transport, introduction of 17,000 buses and 37,000 taxis across the country

• Improving the efficiency of the national railways

• Increasing the country’s gas exports

• Producing 700,000 barrels of crude oil per day from West Karoun oilfield

• Boosting petrochemical exports from $9.9 billion currently to $12.2 billion in 2014-15

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