conf!dential public disclosure authorized no. pi- 11...conf!dential report no. pi- 11 % be returned...

C O N F ! D E N T I A L

Report No. PI- 11

% be returned to Reports Desk immediately after use.

The confidentiality of this report must be strictly 06served. It is available only to those members of the B,ank Group staff to whose work it relates Any further release must be authorized by the dlepartment head concerned.

INTERNA'I'IONAL BANK FOR RECONSTE!UCTION AND DEVELOPMENT

INTERNATIIONAL DEVELOPMENT ASSOCIATION

- --A- - -_... K L r V K . 1 - Vl\I

TEXTILES'AND MAN-MADE FIBERS

IRAN

(iil: three 'vo1um;e s )

VOLUME 111

MAN-MADE FIBERS

Indtistriai Projectii Department

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i i c r o n p s : ICB - Industrial Credit Bank I - Ind- st rial and Yini.n.g Develop.ent

Bank of Iran !,I!@? - Han-made Fibers RCD - Regional Cooperation f o r Development

(Iran, F2,r!ey, Pakistan)

f'*.*nnnrurr Enr r4~rn l nn+ 21s. vur A - z r r u , y q u r r a r v r * v . 75 = ?Js$1.GG Rls. 100 = US$1.32

ivieasurements: All physical.measurements are i n metric units.

REPORT OI'J TEXTILES ANI) PUIW-I~lA.lE FIBERS - (IN THmE VOLUI;ES)

IdiAN-XADE FIBERS

This repor t i s based on the f indings of a mission organized by the 1ndu.strial Pro jec t,s Department which bnducted a survey of manufacture of t e x t i l e s and man-made f i b e r s i n I r a n during the period September 25 t o Cktober 25: 1970. Tlie composi.tion arid r e spons ib i l i t i e s of members of the mission were a s follows:

kroon K. Basak - Chiel" of Mission Peter 8, r;lensha~q - YJn-mde Fihers James A. Nannery (Consultant) - Text i le Manufacturing Rnnn 0- prnsel~ (Cnnmltant) -----

and Robert Frazier (Consultant A 1 t . ~ r n n t . e ) - Textile Demand --.. --- --- -- ,

PIarketing

(VOIUME I - THE l&IiT REPORT LTgxqiE 11 = T,m TEXTIm I$zuSTRY VOLUNE 111 - KJ-IWE FISE;RS)

Industrial- Pro j ec t,s Depmtment 1.. . 1 n i n7-1 uurlt: ru, 1.71~.

IF,.A_N: REPORT ON TEXTILES AND MATJ-MADE FIBERS - Table of C o n t e n t s

V o l u m e 111: Man-Plade Fibers

Page No.

INTRO~lUCTION.......*.*..o...a.......*............*..... 1

I. PRESAJ'T CONSUMPTION, SOURCES O F SUPPZY, AlD P R I C E S O F MMF IR' IRAN..... ...*................................... 2

I1 PRESEN'T PRODUCTION F A C I L I T I E S THE ALIAF NYLON PLANT 10

111. FUTURE; DENAND FOR IN IRAN.e..*.e.........e.......*. Ilr

I V . F E A S I B I L I T Y OF EXPANDING JIIMF PRODUCTION I N Ii?.AlJ. ....... 26

V e FEXLSIBILITY OF INTEGRATING THE SYNTHEZ'IC F I B E R AND ' P E ~ O C H ~ C J T , ~ U S T R I F " , S m LRWN.. ..................... - 32 -

?I, TI-?? SYNTYmIC FIBER A!W PETROC-W-CJL DDUSTRIES TN .......................................... THE RCD AREA.. 38

2. .nmm nwrvrnnm mi .TD A R T , ncvr~nmnc OF -~-JDARJ-~-~~J T ~ T ~ E ~ S ~n~z .rIl.u J J L I I ' I n L Y U U Y IIUUY W ILrJnICRI

IMPORTERS

3 0 S I Z E O F W PL.ANTS - ECOlJOMIES O F SCALE

h :ECONOT4ICS O F PRODUCING SYNTHETIC FIBEZ IN IRAN

5. :PREINVESTMENT :PROGFUM (~uture demand f o r fiber in Iran) ( ~ ~ ~ i b i l ~ t ~ - a joh-,t 32D Tetra-

chemical Industry)

I t h a s a l r e a d y been p o i n t e d o u t t h a t Irarl depends t o a ve ry 1arg:e extent Qn man-mde f ibers in i ts prod!:ction cf t ex t i l e s . I n Vnll,?~?e I?. ef t h i s r e p o r t , i t was p o i n t e d o u t that: some 115 p e r c e n t o f a l l f i b e r cor~s~lmecl +n T + 3 n ?X 1968 W;?S niax-ma:!e. 1:: that year, some 52,!!0!) tens of man-n:::de ..a. &*U..

f i l l e r were consumed i n I r a n , a consumpt ion which h a s had a growth rate o f onmr. c *rrr-h-t -..r n.*.3...n 4 - r,,#...t . . r r r r , a u n n u c d ~ C L L E L I C ),CL at8i&&ull' 1 1 1 L C L C L I L J C < Z L J . ..a ,... ..c +I.,. 1 ..",,A an*- ..-.. &.a*...

v i r : w KJI c ~ t c ~ r s r hc L C I I I . ~ U I I I ~ LI~III

and s t e a d y growth r a t e , i t is s ~ ~ r p r i s i n g t h a t I r a n h a s p r a c t i c a 1 l . y no pro-. r l . . , . t 4 n n ,.F m r ..-.....A- C l h...-r L-",,,+ U U L C L V I I V I .IICIII- for a sn;al?. nylor; p l ~ n : of 3,0fl!? tons p e r yeax c a p a c i t y , which s t a r t e d up i n 1969 and is now 1 ) e i . n ~ expanded , a l l . nth-- -*-*---A- C41.mw- n r r e c , , - - A 4 - T--* VC..c LIIaLL~-LIIa,IF LVIID ULIIcU sre i m p o r t e d . ?'here have b ~ e n niimer- a b l e proposa1.a t o i n t r o d u c e a d d i t i o n a l man-made f i b e r c a p a c i t y i n t o I r a n , I..... -A*.-. -c ..La-- L-a L J U L 1 L V L l . C U1 Lll t!btZ Llaa

30 far I.-..- --... 1' - - - I u r r l l L t ' f i A LhC-U .

T T - . . ~ ? -L- -.>A < [ ! I - T - - - V - ..-a - r --.- - - . I - L J L - - ---- J - . . - A -1 .. UI1L.J.J. LII1: I I I I U - V I J 5 L L L i l l 5 USt! UI I I I ~ I 1 1 - I l l d U t f L I l J f Z L C U I l b l . h L C C 1 cIJ.IIl~JSL.

e n t i r e l y o f c e l l u l o s i c t y p e f i b e r s , s r ~ c h a s r ayon s t a p l e and r ayon f i l a m e n t . . # 1 L _ ~ n e s y n t h e t i c f i b e r s -- n y l o n , p o i y e s i e r and a c r y l i c s -- ,-..-- were ~n L L oduced t h e n an.d have been growing ral)itll .y.

Man-made f i b e r p r o d u c t i o n i n I r a n is p r o b a b l y now a t a t u r n i n g .. p o i n t . llemand f o r ra.yon t y p e f i b e r s is s t a g n a n t , anti even d r o p p i n g o f f ,

whereas demand f o r s y n t h e t i c f i b e r s -1.9 i n c r e a s i n g . The p o s s i b i l i t y o f I r a n p r o d u c i n g s y n t h e t i c s w i t h backward i n t e g r a t i o n i n t o p e t r o c h e m i c a i - s -- an ci t h u s t o o i l , I r a n ' s g r e a t e s t n a t u r a l . r e s o u r c e -- is t h e r e f o r e becoming more i n t e r e s t i n g .

Thi.s p a r t off tile r e p o r t w i i i a t t e m p t t o draw this p i c t u r e more c l e a r l y i n t o f o c u s by showirig t h e p r e s e n t c o n s u n ~ p t i o n p a t t e r n o f man-made f i b e r s i n t h e l i g h t of p a s t t r e n d s , d e s c r i b i n ~ the p r e s e n t s o u r c e s o f sup-. p l y i n c l u d i n g t h e l o c a l n y l o n p l a n t , and a t t e m p t i n g p r e d i c t i o n s of demand f o r t h e future. i n i i g h t o f the. demand estimate, i t w i i i t h e n be p o s s j b i . ~ ! t o examine t h e f e a s i b i l i t y o f ( a ) e s t a b l i s h i n g a d d i t i o n a l l o c a l . p r o d u c t i o r l

T . u n i t s and ( b j i n t e g r a t i n g backwards t o pecrochemicai . p r o t i u c t i o n . L C is l i k e l y t h a t t:he b i g g e s t d e t e r e n t i n s u c h backward i n t e l : r a t i o n w i l l be t h e lack of enough demand i n I r a n t o j u s t i f y pc t . rochernica j p i a n t s o f a minimllni economic s i z e . The r e p o r t w i l l t h e n exam-ine t h e p o s s i . b i l i t y o f o t t i c r markets f o r petroci1erni.cai.s and i n p a r t i c u l a r the e x i s t j . n g anti p o t e n t i a i demand unde r t h e R e g i o n a l ( : oope ra t lve 1)evelopment (RCI) ) scheme which I r a n has w i t h i t s n e i g i ~ b o r s , l 'urkey anti T'nk i s t a n .

A c : l e a r d i s t i n c t i . o n is made be tween nlan-made f i b e r and s y n t h e t i c : f i b e r . Man-made f i b e r -- a l>brevi .a ted i n t h e r e p o r t a s MMF -- r e f e r s t o -- all. f i b e r ~nater ials w h i c l ~ a r e produced by t~r~mnn m a n i p u l a t i o n o f n a t u r a l r e - s o u r c e s , i n o t h e r words , f i l , c r s wll.Lcli do n o t o c c t ~ r n a t u r a l l y s11c11 as wool , , c o t t o n , f l a x , j u t e , e t c . On t l ~ e o t t ~ t : r i~nntl, s y n t l ~ e t i c f i b e r s r e f e r s p c - c i f ical.1.y t o t h o s e f i b r o u s m a t e r i a l s produced from polymers which i n t u r n

are s y n t l ~ e s i z e d f r o m them I c a l s by cllem i c : ~ 1 re;tct inns. The main synthet ic f i b e r s a r e t l ~ e nylorl , p o l y t s t e r and a c r y l i c t y p e s , t h e o t h e r main MMF's b e i ~ l f : t l r c ? cell .ulosic: t y p e s , namely rayoll ancl acetate;

I. PR1:Slq:NT CONSIIMPTT O N , SOIJHCES OF' SUPPLY, N!? !'KT_C).C OF MMF LF! I?-A?!

I n t r o d u c t i o n

1.1 Man-made f i b e r s have been used I n I r a n f o r many y e a r s f o l l o w i n g t h e cm!merc i a l prcducc!.cn an:! ';he i n te rnc? t lana l t r i tde i n rayor?. The s i l k - l i k e c h a r a c t e r i s t i c s of r a v o n and i t s r e l a t i v e l y low p r i c e l e d t o a n e a r l y , 4 0 m o n r l f G r G q k v < - c n , ~ n t - f * > < n c n L i n l > . ,vnnnvt.;nno n 4 t l x i c C < l - e w ifi T w - m - -A ULIIACXIIU ~ c a v ~ a ~ u L V L I L U A . L L . L L ~ , ; L C L ~ L ~ ~ I L \ I ~ I I L L I \ I . L . ~ VL C . & A O LI.IIZL 1 1 1 A L C I I I auu

many o t h e r mid-East c o u n t r i e s , s o t h a t t o d a y t l ~ e y show a b n o r m a l l y h i g h p e r ,,,it, -,-,...-- t l . . . . , F , , , . . , l l . . l ~ r . 4 , C:L.., .- . . . . I . - . . ,.-m-qr~,l C, -tl.,,r -r...-+rin- L r l ) ' L L C > C V L L D I I I I I ) I C I . . V L 1 3 L l l L L L l l U l \ J i ) l L l .l l l C . 1. 3 W L l L L L C I I I I I ) > O L LU C V V C L I G L C V U L l L l LCD

w i t h a s i m i l . o r p e r c a p i t a inconie. 'l'he denland f o r r a y o n was enhanced i n T.-".. I... -1.- ..La 1 'c.. - F --...-.. ̂ C"..l A

~ L U I I u,v LIIC d ~ ~ r l . i . ~ . y C I L LLIY\ , IL DLLI~IIT to I t , . " ,,.. 11 ,,ct,, +L. r,.., h CL., -,,,,,.,,,

L a L L .y C V L L U L I L L L L V U ~ ~ I I LIIG ~ / L V C C J D F ~

of y a r n p r o d u c t i o n t l ~ e r e l ~ v n v c r c o ~ n j n g d e f i c i e n c i e s i n t h e m a c h i n e r y -- w h e t l ~ e r 4.,k,ov.>"t I . L I I I C . L L L I L

; 1 t - - - ; .Twnr. e h . . ~ finrlr . i t m e 1 C iE t h e L C I 3 U I L 11,. ,,\,"I ,,,<A' I I L ~ I I < I I , L L . l L a,, L L 1 1 1 . 3 L L L . U . 2 I L .2ZA.L

p o s i t i o n t o d a y where i t s raven c o n s u o ~ p t i n n is p r n c t i c a l . 1 ~ e q u a l t o i t s c o t - . . . I -- ..I-. . L u l l L U 1 1 3 L l l l l ~ I L I UII , wllic;l 1 ~ ~ t : a ~ . t ~ c a :.,-- b e i n ~ , a b ~ * ? ~ i i i ~ l l ~ iii.j;h, 5 3 ZISG expeiisive ifi

terms o f f orci l ;n e x c i ~ a n g e . (Kayo~l i m p o r t s c o s t some $20 m i l . l i o n / y r . )

1 . 2 The rise of s y n t l ~ e t i c f:ibers is Illore r e c e n t b u t is c a t c h i n g o n qiii c l K l y e s i l e c ~ a ~ ~ . y . jjr-i c:e%5 I r l i iv t : u c c ~ , - . . l J - . . 1 1 1 r c i i i i the last ::: years. AS is

u s u a l i n d e v e l o p i n g countries, nyl.on was t i le f i.rst f i b e r t o b e u s e d i n any quantity foi.1owe.d hy ncryi.i.c:s clnd iastiy- polyes'ier. And iis is a l s o i i s u a i , t h e r a n k i n g of t h e g r o w t l ~ rntcs f o r t l ~ e s e f - i b e r s .is p r e s e n t l y i n t h e r e v e r s e o r t i e r of t h e i r i n t r o c i u c i i o ~ i .

i .3 'N'yi.onls mni.n a p p i i . c a t i on is i n h o s i e r y and o t h e r women's k n i t t e d wear as w e l l as f o r t i r e c o r d . A c r y l i c f i b e r s a r e used f o r t h e i r w o o l - l i k e q u a i i t i e s i n s w e a t e r s , s o c k s and b i a n k e t s . P o i y e s t e r f i b e r s are now ( a s a r e s u l t o f d e c r e a s i n g p r i c e s ) finclinj; i n c r e a s i n g a c c e p t a n c e f o r b l e n d i n g with

?...

c o t t o n anti wooi f o r s h i r t i n k ; and s u i t i n g . I'he a d v e n t o f t e x t u r i z e d n y i o n and p o l y e s t e r f i . l . a rnents , and t h e development of advanced k n i t t i n g t e c h n i q m s is cu r r en t1 .v c a u s i n g a boom i n t h e demand I o r t i~esc f i b e r s i n I r a n as i n t h e r e t i t of tlle w o r l d .

P r e s e n t Consumption -

1 . 4 No o f f i c i n l . s t a t i s t i c s a r e k e p t i.n I r a n of thc! corlsumption o f MYF. I::vcn t i le d ; l t 3 f o r i ~ n p o r t s arc: g a t h e r e d u n d e r b road c a t e g o r i e s f rom which i t I s not pos t ; l h l e t o s t > p ; ~ r a t e t h e i ~ n p o r t s of eac.1) t y p e of f i b e r . T h e r e is t l ~ c r e f o r e no r eady wily of t e l l j n g how much ol- e a c h MMF h a s been consumed i n Iran in r e c e n t y e a r s . To show the consurllption p a t t e r n o n e c a n work o n l y from t h e t o t a l i m p o r t f i g u r e as t h i s i s t h c o n l y r e l i a b l e s t a t i s t i c .

1.5 T o t a l MMF f i b e r i m p o r t s f o r r e c e n t y e a r s are as f o l l o w s :

Table 1 .1 : MMF FIBER IMPORTS ( tons ; /i

Y e a r - i m p o r t s 3 - y e a r m o v i n ~ A v e r a g e

3 7 , 9 7 3 45,707 2 0 4 9 , 6 2 5 9 54 ,802 1 0

Ave. 9.5

/ I M e t r i c : t o l l s a r e u s e d t h r o u g t ~ o u t t h i s r e p o r t . - 1.6 I n s m o o t h i n g t h i s d a t a by u s i n g a 3 y e a r moving a v e r a g e o n e p r o b - a b l y gets a b e t t e r i d e a of t h e p a s t c o ~ ~ s u m p t i n n of MMF, t h a n t h a t o b t a i r ~ e d f r o m t h e i m p o r t f i g u r e s f o r e a c h y e a r . D e s p i t e t h e i r r e g u l a r i t y of the i m p o r t d a t a - w h i c h c o u l d p o i n t t o p e r i o d s of o v e r and u n d e r - s u p p l y , and h e n c e s i g n 1 f i c a n r i n v e n t o r y c l ~ a n ; z e s , t h e M i r l s i t r v of Economy h a s a t tempt:etl t o b r e a k down t h e t o t n l f i w r e s .

1 .7 I n two s t u d i e s - o n e i n 1968 baseA on t h e 1967 i m p o r t d a t a , tile

o t h e r i n 1970 b a s e d o n 1969 d a t n , t o t n l i .mpor t s w e r e b r o k e n down by indi . - v i d u a l f i b e r , based o n i n t e r v i e w s w i t h i m p o r t e r s and u s e r s . T l lese a p p e a r t o b e t h e o n l y s t u d i e s of t h i s t y p e and o n e may t h e r e f o r e s a y t h a t t h e o n l y c o n s u m p t i o n p a t t e r n s k11oc.m w . i t h a n y d e g r e e o f r e l i a b i l i t y are those! f o r 1967 and 1969. T h e f o l l o w i n g t a b l e summari .zes t h e ini is try ' s s t u d i e s f o r t h e s e y e a r s .

T a b l e 1.2: BREAKDOWN OF MMF IMPORTS BY M I N I S T R Y OF ECONOMY -- Growth

- -- 11)67-- 1969 - Kate Tons -- X T o n s X -- % / y r

C e l l u l o s i c

Nylon

A c r y l i c

P o l y e s t e r

T o t a l

! - 8 For a l l it-.: i ! l l lprent_ i !?. lccurxc!p~, c ! ~ e Mifl!.scryWs study dees ; ; i - v r e

3 q u a n t i t a t i v e v iew o f wllat is w e l l 1c1lown i.n I r a n , namely t h a t t h e c e l l u l o s i c s Pro tJ10 A n r n i n n n t 9 F bl?t t!?zt tiley are grcwing s!.cwly ix c=x:parison wit!; ..-- -..- " U > . . A . . ' . . . L

s y n t h e t i c s , and t h a t p o l y e s t e r and a c r y l i c s a r e t h e growth f i b e r s w i t l i i n t!!l s ca tegcry .

! .9 The data for 1967 m;:y be m o r c t accur;:tc t!:n:: those for 1969 3s t l l c r e were less c r r a t 1 . c ch;ln};es i n t h e i m p o r t s t t ien. I n v e n t o r y c h a n g e s

therefore less s . iKn i f j can t ln l!!h7 t h ; l n in 1 0 ~ 0 ,-,. +L,+ +L. , 1 n ~ 7 I , 1 / 1 J / ;)\I L l I C l C C I I C 17111 1 1 1 1 -

p o r t s were 1i.ltel.v t o h c nlore c l o s e l y r e l a t e d t o c o n s r ~ m p t i o n t h a n t l i o se i n 1969.

? . l G j;xcept for some 3 ,0=0 per year of 6 textile yarn produced a t t h e S t l e rka t Sahnmi A l i a f p l a n t , a J l PPlF used i n I r a n is p r e s e n t l y . , 1 , - 1 I ..-....-A A ^ - . . 1 A r - - * l . - L l - . - IIII!,UL LEU. U I I L C P I L U I L L ~ L C ~ V J I ~ I ~ N J L L S L I L C J ~ L I C : S are not made a v a i l a b l e i r i s u i - f i c i e n t d e t a i 1 t o i d e n t i f y the p r e c j . s e s o u r c e s o f e a c h of t h e f i b e r t y p e s , i iul 'ire - 1 I - . - c-- ~ ~ ~ t i r t ' UiiLii l o r tlie c o i i n i r i es ot' s t . i l~piy f v r t h e most recent i m p o r t s . However, tht: f o l l o w i n g tab.1 e I ~ n s been c o n s t r u c t e d from ttie 1965 d a t a , wlii cll ai-e ..L... L I I ~ - - - n t o b t recent iii eiioiigh d i - t a i J . , to siiow iiie main supplier countries .

1'0 t n L P e r c e n t a g e Coun t ry of O r i g i n ii i . ,. R i -

- ~ o n s - 1 o n s - west i:ernlanv .J apan ita i y A u s t r i a ... I'aiwan I1.E;.

Netilcrinnd:; Swecl e n I J O C I J ~ J ' France Otllt!rs*

T o t a l 2,6164 40,233 100 100

R 1 - m i l l i o n R i a l s

* Among t h e " o t h e r . c o u n t r i e s " , t h e cl.1.ir.f s u p p l i e r s are : I s r a e l , S . Korea , Czechos lovak i i l , F r a n c e , S p a i n , S w i t z e r l a n d .

1 . 1 1 'Ttli s sliows t l le dooli nanc-c of Cernlianv and J a p a n a s t h e main s u p p l i e r s i n l L ) 0 ' ~ , nrld I).isc:d on i i~ t~? r -v - i t ?ws w i t h I . n p o t t e r s and consumers t h i s s i t u a - t {on S L i 1 l prt:v.ails t odav . W i ~ i l e Ceri:lany n1.so dominated t h e i m p o r t s o f r:ivoll f ihe::s , I t n l y ; ~ n t f tlol.1 rand ~ \ ~ c r e ahead of .Tapan i n i m p o r t s of s y n t h e t i c s

i n 1965; a l t h o u g h J a p a n may have moved ahead i n a c r y l i c s u p p l y . P o l y e s t e r f i b e r i m p o r t s on t h e o t h e r hand are l a r g e l y i n t h e hands o f t h e two German s y n t h e t i c f i b e r giant:^, Bayer & Hoechs t , w i t h I C I o f t h e U.K. a l s o v e r y s t r o n g . Nylon is s p r e a d f a i r l y e v e n l y among t h e i m p o r t e r s . The dominanccz o f Gern~an anti J a p a n e s e c o n ~ p a n i e s i n t h e s u p p l y of I ran ' s man-made f i b e r s probab1.y exp l - a ins t h e keen i n t e r e s t shown by t h e s e companies i n i n v e s t i g a r r - i n g p r o j e c t s f o r l o c a l m a n u f a c t u r e r .

S y l l t l ~ e t i c F iber P r i c e s i n I r a n

1.12 Frc~m i n t e r v . 1 . e ~ ~ wit11 i ~ n p o r t c r s , consumers and A l i n f Management i t h a s been p o s s i b l e t o draw a r c n s o n a b l y c o m p l e t e p i c t u r e of t h e s t r u c - t u r e of s y n t h e t f c f i b e r p r i c e s i n I r a n . The s i t u a t i o n f o r e a c h f i . b e r is d i s c u s s e d s e p a r a t e l y and t h e n a summarized compar i son is made w i t h wor ld p r i c e s t a k e n from t h e i n f o r m a t i o n g i v e n i n Annex 1.

1.13 As i t is t h e b e s t known, n y l o n is d- iscusse t l f i r s t I.n some d e t a i l . t o show t h e k i n d of deve lopmen t s w i ~ i c h have o c c u r r e d i n t h e p r i c e s of man-. n a d e f i b e r s i n I r a n .

Nvlon - 1 , I 4 Five years agoi h e f o r e t h e Ali.nf p l a n t was m r ? n t ~ d ~ 4 0 denier ny.!nn y a r n wn.s s e l l i n g f o r 113 t o 125 d l l h I / CIT; Trnnii ln p o r t ; t o d a y i t s e l l s f o r - 72-79 &!lh on t11p n m . r b : ? s i s= Ueprenet~tnt ivps of tljc I m n o r t ~ r c - - 2nd con- srlmers s ra te t h a t lnndinl : , c l e a r i n g and i n l a n d f r e i . ~ : l ~ t c h a r g e s add ano t l i e r 6-? percent to the r _ , i . f . pr ice i ! 1 $cnr_.ra!., O!? c!!Cs !>z.sis 2nd z f c p r adr!in:: impor t d u t y t h e dc l . iv~ere t l price:: of d j . f f e r e11 t nv1.011 y a r n s c a n h c c n l c u l n t e d frc?rr! kn!>wn c . i, f . pr ices , '!'!!c.ce 2 r e c~mr;ll~r!.?d r..l!.th t!lc A l i z f pr ice l i s t .

D e n i e r c i f Price Landjnt: C o s t s Impor t I)uLy D e l i v e r e d P r i c e A l i a f P r i c e

.-- --- /1/ \Uimr mentl.onetl t h a t he s o l d thf.!; y a r n f o r 13% k l i h i n s m a l l l o t s . -

1.15 'I'11.i.s compar ison npt l y sl~c-)w!; llnw cornpet i . t i v c t l l c ! Imported f i b c r s .?rt? w!.?-h t ! ? ( ? ~ c !.0~311j' ~ ~ c Y ! u c c : ! . 'L'!:c r Cfcc t of' t!: J s ;! Lscrcpzncq' = e;;!;n;;cec!

..,.......?... - - A 1 1 I - - ..--J L I J l l l J l l U I l d . l I C I W.1. l..L I I < 1 LA.?bC.U

:.n " 1 . ' L I I ~ S report .

as i t I s l)y c o n ~ ! ~ l n i ~ ~ t s of poor q u a l i t y of t l ~ c locn' l rnn te r i a l - i s d i s c u s s e d i n tlie s e c t i o n on t l ~ e Alial ' p l a n t .

1.1fi l 'he conc Lr~s-lon t 1 i ; l t 1n.iy hc: tlrt~wn from t h i s c l i ~ c u s s i o n is t h a t .Ira11 e n i o v s tlle I>encf i t of l o w p r i ccs f o r irilportc~tl ya rn w l r j c11 rest1l.t iron] st'roni,: cornpet i t ion arnolil; exporters, t l l ~ t f u r t l l e r p r i c e rcduc t . ions of i l n -

po r t ed y a r n mir;ht be p o s s l l > l e , i111d t l i a t Loci11 prn(iuct.i.on does n o t a t prcs- enf compete 111 p r i c e wit11 . Impnrts even a f t e r i r r~por t d u t i e s .

Nylon 'I ' ire (;orcl

1 . 1 7 Uotll Nylon 6 ant1 Nylon 66 t i r e cord is be ing used i n tires pro- d u c e d i n I r a n , The foLlnwin:; ave rage p r i c e s - c.i. f , Tehran - were g iven f o r t h e s e f i b e r s b y t h e t j r c protlucers.

Tahl e I . 5 : T I R E CORD PItTCES - IRAN (d/lb, c i f 'I 'el~ran)

N y l o n f)

Nylon 66

Price

The p r i c e f o r Nyl.on 6 t i r e (lord II:IS been c r e e p i n g up l a t e l y w h i l e t h a t f o r Nv lo !? ! : f? c!,rd ! ! 2 s !>ac!) drnp l i i nge ! ! y :pec:-!:jl nrr:!np,r.mp_nt, t!!e t i . r ~ prnacr .~_r . . . pity no du ty on arly irl~portecl i l l p u t s , i n c l u t l l n g t i r e co rd .

1.18 Tlie c u r r e n t pricles o f p o l y e s t e r - a l l of whlch is imported - a r e c l , r , t . t m Lal, , , . , fron; i!lfor3!a!'j=:! g j , ~ ~ : * ! ? h y i!!!nrlr+orc . , a m . , " L . ,,-A".. y.,. -..-..-

Type c i f' I r a n Port: 1,antlI ny: C o s t s Duty D e l i v e r e d P r i c e

S t a p l e , 50 nlm 38-113 .'3 6 47-52 1.': 1 .....,.- .- I 1 . 1 , I I I I < ' L I L

I f l < ~ ' > ->7 1 ! 1 9 - - - . J /

7 - 1 3 1 - 1 - 3 7 L I 139-276

-1.L.. I - - . - J C - - J - - -c L - & L 4 .-... -.. 1 l I C I U W L l l 171 .I LC I I L L J I J L I I C Y } J C : r 3

is {Iue ',. +L.. ,' ,A,, ,,,,, + ,,,-.-. c : c . z - - L O L.1II.I i) L l L J L l g C A [ ) V L C C \ I I I I p C L L L LULL $ ~ i

these filje.1-s.

1.19 I t w ; t s because of t h e a v ; ~ i l a b i l i t v of impor t s a t such low p r i c e s r i r : l i n rt*c.t:.~~i p ro l jos i~ i t o t.:;inbi isil a p o l y e s t e r s t a p l e p i a n 2 i n Iran d i d I I I : 1 I . , sl ' l l t- ! ~ r i , p o s e ~ l pl;lnl: would h w e had a c a p a c i t y of 3 ,500 t i v r . o t st:;rpie wi~icil wo~titi il;ive cosc a t i e a s t 68 kiib t o produce, (Tile t ' o r e i ~ n sponsor of t h p p r o j e c t i n d i c a t e d t h a t t h e p roduc t would have had t o l)e s o l d f o r more t h a n ti1:i.s t o make t h e p r o j e c t a t t r a c t i v e en0ugh.j Even t h e hreakeven p r i c e would tllus have r e q u i r e d some 58% nominal p r o t e c t i o n . T h , i s is beyond t h e 352 ad valorem p r o t e c t i o n now r e ~ a r d e d as t h e maximuln

by t h e M i n i s t e r o f Economy, and was t h e main r e a s o n f o r i t s r e i e c t i n g tt ie l i c e n s e a p p l i c a t i o n f o r t h e pro : jec t .

A c r y l i c

1.20 From i n f o rma t i n n s i l p p l i e c l bv i n i p n r t e r s and from two i n v e s t i g a t i o n s For t h e e s t a b l i s h m e n t of a n a c r y l i c f i b e r p l a n t i n Iran? the following prices f o r a c r y l i c s t a p l e and y a r n c a n be d e r i v e d :

T a b l e 1 .7 : ACRYLIC FTI3ER PRICES - IRAN - !C!lb)

C u r r e n t S e l l i n g Tvne c i f P r i c e L;lfidlno C ~ s t s nutv g c l i ~ . ~ e ~ ~ ~ j Price - Price - S taplae a 55-59 -, 4 6 65-61! 6 8 Yarn 154 10 2 7 181 222-240

S t a p l e is t y p i c a l l y 3 d c n i e r , 76 mm, h i g h bul.ky, s e m i - d u l l . Yarn is t y p i c a l l y m<nde from t!!is f i b e r to dcuble 46 metric coi;nt (N?! 4 9 / 2 1 .

1.21 T h i r q n o - 1 1 - e h r \ . . v r +.he 1 n . r n r l - A -6 4 . . . r , n r + - r rnrl C-n- + -LA - - 1 1 4 - , - . I . . L i ) a h C I L I I . > L I \ . I . I Y i ) L L . . - .L\IW t l l L L C . I J L 1 I I I ) I I , L b Z , (111LI) L l U L l l CLIC; . T c 1 1 1 1 1 ~ ;

pr ice : ; , t h a t t h e r e :is n o t much p r o f i t i r l se..Lliny: s t a p l e , b u t A f a i r (20-352) m a r k iip a v s i l a h l e on ynrn.

1.22 .',.I-- - . .11. . -1- -2- c:l.,.-- --- 6 1 . - 1 * - - - - ,=:I- ---- 3 ---- * - > I - - - L I lC LCJ . .LU .LUZ I L L L L l J C L ?I F1l.Y. LI lC L U W C a L C C J . S L I. L L J e L S ~ l l l ~ l ~ . J K L ~ ~ l L t I L U

I r a n , a f a c t t h a t a c c o u n t s f o r t h e i r p o p u l a r i t y and wide u s a g e . The f o l l o w - ing of - - - - -LA-'-.-

p r . ~ c t : s w a 3 u u ~ a ~ l t r t i .

Type <:if P r i c e - V i s c o s e s t a p l e 22-24 P o i y n o s i c s i : a p i e 2 7 Viscosle Ei.l.;~ment 6 7 ( i 5 f i 61 390 cien.ierj

Landing C o s t s Duty D e l i v e r e d P r : e

i .23 A s y n o p s i s of tile f o r e g o i n g I r a n i a n p r i c e s is given beiow t ogec ' ne r w i t 1 1 n summary o f i n t e r n a t i o n a l p r i c e d a t a from Annex 1 s o t h a t a Judgment can bc made of I r a n ' s p o s i t i o n i n tile c u r r e n t i n t e r n n t i o n a i marke t f o r PPV.

I r a n P r l c e s World P r i c e s 11 - c l f !.2!1c!ccj k S P l l i r ? . , - !As t -

40 .Ictl Nyl_gfi 72-79 77-31! 1 13-21 6 87-1 67 7i) den Nylon 67 0 7 102-206 79-1 60

Nylon T i r e Cord 91 -1 00 31 -100 80-88 77-84

P o l v e s t e r S t a p l e 38-43 41-46 61 -68 35 P c l y e s t e r Fj.?nment 105-221 1 1 2-24(! 14 5-205 ?30=! 80

D-..,... C + - - 1 ~ \ a y u r ~ J L . I ~ J A C 3 3 3 1 . -L-;- ,

32-7 < L J - - _ I 27-41: 25-38

Rayon Fi La~ne~lt 6 7 77 100 96

/ I IJased mos t ly on d a t a F r o m t hc 1J.S. ; - lr i~ . l U.K. - * l : . IF I1 . .A . t . - . I . ,I..+.. L > ~ \ L l . u u L l l h U U C - Y

4 ,> 1 I . LL1

rs - 1 . 2 - - - - --J a. I . . . 2 - L A - 2 -L - - - - ~ r o l l ~ L I I I . ~ C C ) I I I ~ ~ ~ ~ I ~ > C J I I i i l 11 . i I I !C U ~ J L S I c l v e l l J I I U V ~ aiid in Aiinex i, it

i s p o s s i l ) l e to d r a w the f o l l o w in}; c n i ~ c l u s f ons :

( a ) I r a n is e n j o y i n g low pri .ces for its MMF. T h e i n t e r n a l s e l l i . ~ l g prices of i i i j c r s i i i I=;-in less d u t y ore w e l l . below l i s t p r i c e s i n t h e 1l .S.A. and tlle I.I.K., and a r e cornpnrabie w i t i ~ tile d i s c o u n t e d s e i i i i i g price i i i 'riiose c o u n t r i e s .

( b ) The e x p o r t p r i c e s f o r man-ri~ade f i b e r s a r e l e s s t h a n t h e s e i i i n g p r i c e s i n t h e producing c o u n t r i e s i n which t h e s e e x p o r t s o r i g i n a t e .

(c) I r a n i a n c . i . f . p r i . ces a r e a b o u t a s good a s one cou ld g e t i n t h e i n t e r n a t i o n a l market a t p r e s e n t . Tlic f u t u r e of i n t e r n a t i . o n a 1 p r i c c s for MMF j.s n o t c l e a r . On t h e one h a n d , t h e r e is tile h i s t o r y of p r i c e e r o s l o n t h a t cou ld suxgest t h a t f u t u r e d e c l - i l ~ e s i n p r i c e s might be p o s s i b l e , e s p e c i a l l y i n l i . ~ h t of tile o v e r a l l slowdown i n t h e economies of t h e developcd c o i l n t r i e s and some o v e r c a p a c i t y i n i n d u s t r i a l c o u n t r i e s . On t h e o t h e r hand, i n d u s t r y a n a l . y s t s are a s k i n g j u s t how low can p r i c e s f a l l b e f o r e some t y p e of co -opera t ion among p r o d u c e r s t a k e s p l a c e t o liold p r i c e l e v e l s . There i s some ev idence of t h e l a t t e r - a s d e t a i l e d i n Annex 1 - where rayon and p o l y e s t e r p r i c e s have marked up r e c e n t l y i n Western Europe. Whether t h e s e m v e s w i l l ho ld is u n c e r t a i n .

( d ) A t b e s t i t appears tha t p r i c e s w i l l ho ld t h e i r p r e s e n t l e v e l s . Si~nificant i n c r e a s e s iri tile international t r a d i n g prices f o r s y n t h e t i c f i h e r s sl-lould p r o b a b l y n o t he c o u n t e d on f o r some time lout p r o b a b l y also no rna:jor f u r t i l e r deciine. iii this study t h e n , t h e c u r r e n t c.1. f . p r l . c e s w i l l 1)& con- s i d e r e d r e i i - n ' h i y f i r m and w i i . 1 bc useti t o judge Cu tu re p r o j e c t s . What e f f e c t f u t u r e p r i c e devel.opnle.nts inay have on t h e t i ln i t lg on Mfsli7 pi.:~nt:: i r l v c s t m e r i ~ s i.n I r a n ik f u r t h e r d i s c u s s e d i n ( : l~ ; lp te r IV.

i i i s t o r y of Company, iiwnersi1i.p

2 . i Some f i v e y e a r s ago a group of l o c a l T r a n i n n e n t r e p e n e u r s I n v i t e d i n t e r e s t fronl s y r 1 t h e t . i ~ f i b e r p r o d u c e r s i l l Europe and t h e [J.S.A. t o b u i l d a nyiori t e x t i i e p i a n t . A i l i e d C i ~ e m i c n i Con~pany o f t h e U.S.A. gave t h e most f a v o r a b l e r e p l y and j o i n e d t h c g roup t o promote n 2,500 t o n l y r . n y l o n p r o j - e c t . I i . II)Bi was i n v i t e d t o j o i n t h e p r o j e c t , and a company w a s formed - The A l i a f Nylon Con~pany - or1 t h e bns . t s of 50% I r a n i a n e q u i t y and 50% A l l i e d e q u i t y . IMIIlI I , 'The I5nnk Ma.l.li , and t h e s l ~ ; ~ r e h o l d e r s a l s o p r o v i d e d l o a n f i- nance . T o t a l f i n a n c e was 9/19 m i l l i o n K1, of: which 300 m i l l i o n R 1 w a s e q u i t y , and 649 mi1:Lion R1 was l o n g term l o a n s w . t t l j an a v e r a g e l i f e o f 8 y e a r s a t an i n t e r e s t r a t e of 82.

2 .2 'The p l a n t s t a r t e d commercial. o p e r a t i o n i n J u l y 1909, b u t i n e a r l y 1970, A l l i e t l Clirinical d e c i d e d t o wi.ttlclraw fro111 t h e v e n t u r e . T h i s was proh- a b l y due t o a d e c i s i o n of ~ . L L i e t l ' s t o p n ~ a ~ ~ ; ~ g c l n e ~ l t : t o g e t o u t of t h e f i n e d e n i e r ny.lon y a r n b u s i n e s s . 1:xccpt f o r Al.inf and two o t h e r s m a l l p l a n t s , A l l i e t l ' s l l v l o ~ i b u s i n e s s i.s tlclvotrrti t o t i r e co rd ant1 i n d u s t r i a l y a r n . I t is a l s o liliel y t l ~ a t A 1 l i n d ' s t r o ~ l l ) l e s w i t . l r t h c S l ~ a p u r Chemical complex encouraged i t s witl~clr :~wnl. f rnm y e t anot:llc: I - Craninn v e n t u r e . l layer A . C . of (;ermany lrnti been t l x p o r t . i ~ ~ > : ny lon y a r n t c ~ I r a n f o r some f i v e y e a r s and toolc t h e o p p o r t u n j t y t o p u r c l ~ a s e All.iecl's s l ~ n r e i.n A l i a f . T h i s t r a n s a c - t i o n is now c o m p l e t e , and Uayer p e r s o n n e l I ~ n v e t a k e n t h e management and t c c l ~ r ~ i c a l pos-i t i o n s l ~ e l d by A l l i e d .

D e s c r i p t i o n of F a c i l i t j e s -- - -- --

2.3 T l ~ e p l a n t is l o c a t c t l solllc 15 ki l o m e t e r s w e s t o f T e h e r a n and con- sists of e q ~ ~ i p r : r ~ ~ n t t o r e c e i v e c; lprolactam and p r o c e s s i t t o undyecl n y l o n y a r n . 'The y a r n is p;rckngecl t r i t l l c r on concn ( p i r n s ) o r on beams f o r k n i t t i n g nl;ichi.ne.s. 1:n a d d i t i o n t o tlrc proress.irl;;, E ; ~ c j l i . t . i . es , t h e p l n n t lins i t s own w a t e r s u p p l ) r , w ~ . t c . : r t rea t rner l t p l a ~ l t : anti I)c-).i.l.cr p l a n t . I t a l s o h a s f o u r 1.1 r%J I ) e i s e l g t :ner i r tors t o provi t le i.ts owr~ power as c o n t i n u i t y of s u p p l y from tllc t r c n t r n l sys t em is u n r c l l ; tble. O t l ~ c r ,21l.xil.i;lry f a c i l i t i e s i n c l u d e a n e l a l ~ i ~ r - a t e q1lnli.t v test ill;: l . a l )or ; l tory , n t . ; ~ l i l t e r . t ; ~ and we1.f a r e b l o c k , and p la11 t o f [ice:;.

2.4 'I'l~e knowhow f o r t ! ~ e p l a n t des j r rn was oh tn ine t l from A l l i e d Chemi- c a l and a l so from Vickers-Zimmer of Gernlany. The p r o c e s s s t e p s c o n s i s t o f the polymerization of c a p r o l a c t a m ; e x t r u s i . o n , c u t t i n g and d r y i n g o f p o l y m e r j m e l t i n g and y a r n e x t r u s i o n , f o l l o w e d by d r a w i n g and t w i s t i n g . The p r o c e s s p l a n t and b u i l d i n g s hnve heen d e s i ~ n e d on an e l abora te s c a l e , and the Rayer p e r s o n n e l colnmenterl t h a t c o n s i d e r a b l e s a v i n g s i n t h e c a p i t a l c o s t would hnve been p o s s i b l e i f t h i s e labora te d e s i g n was n o t used. !!owever, it d o e s l e n d i t s e l f t o r e a d v e x p a n s i o n and i t i s p o s s i b l e t h a t i n a n e x p a n s i o n some cost s a v i n g can he achieved.

) r - . .j The p l a n t c o s t was 12.6 m i l l i o n d o l . l a r s , 5 .2 m i 1 l : i o n o f whicl l w a s f o r l o c a l e x . r > e n d j . t ~ i r e s . ' I 'here was no lump s r l m payment f o r Itno.tahow a s t h i s is pait1 o n a runni .nq b a s i s d e p e n d i n g o n t h e l e v e l of produc . tSon .

2.6 The p l a n t h a s a n o m i n a l c a p a c i t y o f 2,500 t o n s p e r y e a r of n y l o n t e x t i l e y a r n , b u t b e c a u s e o f t h e e l . n b o r a t e d e s i g n , i t h a s b e e n a b l e t o o p e r a t e r e c e n t l y a t more t h a n 1 5 0 X o f d e s i ~ n . I t i s n o t s u r e w h e t h e r t h c p l a n t c o u l d s u s t a i n t h i s r a te o f p r o d u c t i o n b u t i . t is known t o b e c a p a b l e of more t h a n i t s o r i g i n a l d e s i z n . Tlic rnanagel;ient f e l t i t c a l l be r e l i a b l y s a i d now t o h a v e a nornirlnl c a n a c i t y o f 3,000 t o n s / y r . 'This i s ; ~ h o u t 25-302 o f the c u r r e n t consumption o f n y l o n i n I r a n .

2 .7 The p l a n t e m p l o y s 428 p e r s o n s , i n c l . u t l l n g 3 e x p a t r i a t e s a n d 91 l o c a l p e o p l e a t tlie s t a f f l e v e l . l 'hc w o r k e r s are a l l men b e c a u s e o f t h e I r a n i a n laws w h i c h p r e v e n t women from d o i n g s h - f f t w o r k , and t h e i r age is 11etwee .n 20 and 35 years . '!'he p l a n t o p e r a t e s on a 3 s h i f t p e r day h n s i s as t h e o p e r a t i o n is c o n t i l i u o u s . Wage r a t e s f o r s k i 1 . l e d w o r k e r s r a n g e he- tween 140 and 450 Rlrs per day ancl for u!?ski.l!_ed workers l?etwp_en lC!n 2nd 151) R l s p e r day.

2 .8 The capro l . ; sc tam raw m a t e r i a l i s c ? u r r e n t l y r ~ s c d a t t h e r a t e o f crimp 3!!!! t m : s per mn!2thi Its present c.i. f . v ~ l u t ! is 19.7 U.S. cents p e r ,<.,...- l b . ant1 t h e d e l i v e r e d c o s t t o t h e p l a n t is 23 c e n t s p e r l b . No d u t y is n n i d r-l Y 0x1 i m p ~ : ~ t e d caprnlnctnn! Q ~ h - ? ? : t!?e d i f f crer? t fn l is accnunted f n r ifi l a n d i n f ; f e e s and t r a n s p o r t c o s t s . 'I'he t r a n s p o r t c o s t w o r k s o u t t o a b o u t cne P.i:?l per t e ! ~ L , ? l ~ m e t ~ , r w!!icki ncrruoc ..,--, w!.t!? t!?c o,enern!.llz recogn ized c c s t o f t r a n s p o r t i n I r a n t o d a y .

2 .9 The p l a n t e x p e r i c ~ n c e d tlic u s u a l t c e t l ~ i . n g t r o r l b l e s d u r i n g i t s 4 - 4 t I - 1 -n..*t.#. -6 -..,.-.-.+4n.7 L . , t -,..,- ..,-#. I L I I L I ' I _ I . I I I V L L L L I J V.. " , ,= : I ' . L I " L I " l l L n , . l l l t _ r l L a L O I.̂ "'.tt 'I"^ A,.,, t, #.&-I.< l 4 " . T , t

t,x. n-)r C L L L I I ) , U l l W l l L " i; . 3 L C I I , I AAL.I;U

o p e r a t i o n now. O p e r a t i n g c o s t s h n v c b e e n I i i f i l i h u t arc d e c r e a s i n g . A l i a f ' s profit is c::::sidercc! reaso::ab?e i:: Irar: pnrtic.;l , ,?rly f o r a company of its t y p e w i t h a f a i r l y wi .desprent1 s l ~ : ~ r e l i o l d i n g .

2 .10 A1.inf f u l l y e x p e c t t o he ab lc t o r e d ~ l c e i t s p r o d u c t i o n c o s t s as I+ 11 ,,..,,,,-'I -,,, ,,.,- I . . -& I . . - - . .c ,F -1.- -..r,cr-- , I - , & ,,A L L \ I c I I I I J L C J J L U I I U C L . L C I I I l l U L 111. C11C C Z d L L 3 L L L l t j ) I l r l l l L r3lLU

as &I.,.. - 1 , z 1 1 L A I C .312 L . L I

of t h e o p e r a t o r s i m p r o v e s . Howevcr , s i g n i f i c a n t d e c r e a s e s i n o p e r a t i n g ,,.,e- ... 1 1 1 ,-.* L, -,,, ;I-1, iinti: +I-.- -. .--- 1 1 '--...I -c .-.. "-.-'- L L l h L* w L L L LII.IL I>C l ) lJ .>.>.Ll1lC L I I ~ U V C L ~ I L I ICVIZJ. UI. IIIALOLIL I.s iricreased.. A l i a E is c u r r e n t l y pursuing p l n n s t o e x p a n d i t s p r o d u c t i o n a n d h a s n licerise .., rnlJdllu -..---> .up to 1 I\ "1)" ..--- -.,.-- " "-

1 0 , l l \ J \ l L I J I L a IICI Y C c l L L v l t J a L 1 L.y

* . L. I I

. , > . z - 2 - 1 ..- ..I.- I , . ? - ? ~\.LJ~IL. BPPIJCICI L O L I I ~ P I L I I L ~ L . L Y 0: F,coiiniiiy f o r a speciai . cons id -

e r a t i o n i n i t s p r i c c setting: and se.l..l:ing arrany.c?nients t o m i t i g a t e a g a i n s t : l o w price: i m p o r t s arid i t s i l i i ili.ai ii.I:;ii c o s t s of p r o c i n c i i o n . Tile r e s u i i oi' t h l s n e a o t i a t i o n was t h a t tile M j n i s t r y set p r i c e l e v e l s f o r A l i a f and a t t h e same t i m e d e c r e e d t h a t a n y o n e i r n p o r t i r ~ g n y l o n y a r n wou1.d have t o s a t i s f y t h c M i n i s t r y t h a t h e hat1 o h t ; ~ i n c t l 25;'; o f h i s rec l r l i r ement f rom A l i a f f i r s t a t tilc set p r i c e s . h i j . a i E s p r i c c s are shown al).ai.nst tile i m p o r t e d p r i c e s

on pngt? 9. 'Th i s I.ndic;.~tc:s t l1 ; l t t l ~ t A l j a t p r i c e s a r e 2 0 - 3 0 1 above t h e d e l i v e r e d p r i c c s of i m p o r t s (60-00% above t!ic c . i.. f . p r i c e s ) . Nntura1J.y t l ~ e iIrrnn!:ernent f o r s c l l i r l g ~ 1 i ; i f ' s f i l > e r d o e s n o t a p p e a l t o t h e u s e r s . I t is well . known t h a t much c h e a t i n g h a s t;tkt:n p l a c e t o a v o i d t h i s r e g u l a - t i o n . From t h e o f f i c i a l i lnpor t f i g u r e s f o r n y l o n y a r n i n t h e l a s t h montl~s, A l i a f would have s o l d 3 4 0 t o n s f o r t h i s t o bc! e q u a l t o 25X of t h e i m p o r t s . I n f : l r t Al iaf s o l d 1 , 5 0 0 t o n s , Uesldcs tlic p r i ce d i s c r epancy9 the consumers con!pl.ain al)nrlt t i le l a c k o f qua1 i t y i n t l ~ e A l j a f p r o d u c t , o f wliich A l i a f is i t-sr l f I I W ; ? ~ ~ and work. i n g l?.?rd cc, nvc:rrnme, A l i r ~ f are not particularly - - - - -. -

p l e a s e d w i t h t h e s e l l i n ; ; arrarlgeriient and r e a l i . z e t h a t i t Is a t b e s t o n l y a temporary measure. In f a c t it h a s already started discounting below t h e set pr . ice f o r s p e c i a l c u s t o m e r s .

2.12 A l i a f s e l l s d i r e c t l y t o t l i e constuners which a r e e i t h e r k n i t t i n g m i l l s ny filzll:!ent t ~ v t ! i r j z e r s . h l i a f ! !zs nrnhal<lv 7hn11t ~ ~ s t ~ m n y g ~f

Y ^ """" 3 q-.-"- - which t h e f - l r s t t h . r e e accol.lnt f o r 50X of t h e s a l e s . 85% of t h e sales g o tc the T e h e r , m area w i t ! ? I ( ! % t c ? ?.sFr?!~.~r? r ? d t h e r e z ! a i ~ d e r mest!.y tc Yaz and T a b r i z . A l i a f s e 1 l . s d i r e c t 1 . y t o t i ie c u s t o m e r s w i t h no m i d d l e man ~rgar.izatio::. Cred?r.t i s exCe:~:!e:! f:>r an average ~f 2-1/2 m ~ n t h s axd d e a l s c o ~ l ~ ~ ~ l e t e c i w i t h i n 15-20 d a y s are t r e a t e d a s c a s h s a l e s . T h e A l i a f p r i c e s inc!!:<!c de! . ix jery tc me^^' nl y 2 ...... ont .

2.13 A 1 ; -6 I.-.,- . .n 1 I - . . I ~ ~ ~ ~ . n , . . l ;>13i; A n ~ ~ L 1 n I,L I , ,A . L L r l i , \vG I .8 a<l Y U I I L = I I uuuuLG its capacity to 6 ,000

t o n s l y e a r i n which T I T w i l l p a r t i c i p a t e f a r p a r t o f t h e f i n a n c i n g . IFC I . - . . r l n a a , , l n L a L a r u - . - . - . - , . 4 - -2 4.1.- L I I c ...--:, I J L L , J t - L C -.-+ 1 / ~ i i i ! coi~cli;<tei! t h a t it is fifianeially viab?e

b u t t h a t i t w i l l n o t re t i l l ce tlie c o s t of p r . oduc t ion s i g n i f i c a n t l y . The mai.n --.----. 3 , . 6 1 . . . a . * I . , . --.-.. L C : L I ~ W L I 1.n LI I . IL ~ t ~ r L . I ! , ~ t n l C G S C of' the C?xi;;iiIsioii j i r ~ j e ~ t i<f,l?. be roiiglilj ; t h e same as t l i a t of t l ~ e o r i g i n a l p l a n t due t o p r i c e e s c a l a t i o n o f equ ip - - .. . . ~ r ~ e ~ r i , a n increase i n w o r k i n ) ; c n j i i t,li aiid i i ~ l c i i t loiiiil p l a n t i n f i a s t i i i c t i i i e . T h e IFC n l )pr ; l i sn l e s t i m a t e s t h a t tlie d i s c o u n t e d economic r e t u r n o f t h e p r o j e c t wiii i n c r e a s e s i i b ; h t i y f r o m 5% a i p r e s e n t t o 6% a f t e r t i i e expan- s i o n . I t a l s o shows t h a t Al- iaf w i l l s t i l l r e q u i r e a n a v e r a g e o f 56% pro- t e c t i o n (39% when i<uropenn dome..;; t i.c price:.; p l u s transport costs are u s e d r a t h e r t h a n c. i . f . p r i c c s ) ; a f t e r thc. e x p a n s i o n .

2.14 Whi l e a c a s e c a n p r o b a b l y be m ; l t f c o u t f o r s u p p o r t i n g t h e p r o j e c t - as b e i n g o n e of t i l e few s r ~ i c a b i e pro , jec t - s n v a i i n b i . e , n o t r e q u i r i n g e x c e s s i v e p r o t e c t i o n co~npnred wi.th o t h e r p r c s e r i t i n d u : ; t r i c s e t c . - it d o e s seem un- f o r t u n a t e t h a t i t wi i l n o t a i i o w f i i i : l i t o coinpcte w i t h i m p o r t s . Expe r i - e n c e i n ot i le i- c o u n t r i e s 113s show11 t i1 : l t unt.i.1 smal.1 p r o d u c e r s , l i l c e A l i a f , 1-each pror iuc t . lon l e v e l s of 8 - lO , .OO~J t o n s p e r y e a r t i ley a r e n o t abie t o cc-rnpete i n t c r n a t i o ~ i a l ly. As Ali:if h a s a l i c e n s e t o expand t o 10 ,000 t o n s pe-r y c n r , t t shoul .d t h e r e f o r e l ~ e cncournget l t o d o s o as s o o n as p o s s i b l e .

---A

I / St.e TFC Kei)ort. No. IFC/I'-105 o f \!as 2 6 , 1971. -

2.15 Apparen t ly one of t h e main r e a s o n s h o l d i n g Aliaf's management -- p a r t i c : u l n r l y t h e Bayer d i r e c t o r s - from committ ing a l a rger expans ion a t t h i s time i:; u n c e r t a i n t y of t h e market development. L a t e r i n t h i s reporl : t he f u t u r e ny lon demand is shot,.^ t o be enough t o s u p p o r t a p l a n t of 10,000 t o n s / y e g r c a p a c i t y , hilt some clues t i.ons a r e r a i s e d ahorlt t h e p r e d i c t i o n s . A deta i : .ed end-use market s t u d v h;ls t i l e r e f o r e bccn recommended, arid once i t i s cdniplete i t s i ~ o u l d be poss:lhl.e t o pernrladc! t h e A l i n f manazer~lent: t o proceed with t h e Eull expansion.

3.1 I n at t t :n lpt ~ I I G tc.~ ~')rcil i c : t tlic f u t r ~ r e ?PlI: tic!m:.~nd, o n e is a w a r e o f !-!tc ..,7.-'>1 ; " I . I , , , l . . t .> , ,c n . - . . c 2 , . , , t - r . , . , ,c,,.,, , ,t ;,>,. .,,,,I t . l , . . f,,-.t. l . l , . . * C . . . " t l > , , t i ,.c.

I . 2 l . L A L . L I ' A . . "'LC<. \ . . I . ,lib ....... I_ LIIII. ..I.I.II.L L . I I I <...,I GI,... . . , I L L L L l f l L . , J L L L I I L L * L 0

a r e i l l a n i11t .1-ot luctory ; ~ ~ l t l h c ~ i c c ~ l~i::,!~ firowI-(.~ P I I ; I S C ' . TIICSC f a c t o r s o);lkc - .... t... n l , n i r ..., ...- -.-<..I r e * i#,., ' . t ~ r y L C L I ~ C ~ L ~ , L L C . . > I I L J I I C I I LC-, J I . I I I i!! TF Ic: : ! .~ 1;:: i ; i : i : !y , ; i s i;G it.:

a p p l i c a t i o n or a rirnooth trvncl L o e x t : i t i I I ~ . : c n n d i t : i o n s . I t j.s t l i c r e f o r e - C + l . . . .. *...A,.+ i ,,-, c ....,.. -. c.. I . - s r , , . r , . l . ! . I . 1 ~ 1 C I I C 1 1 ~ 1 1 1 1 1 3 1 . I I I I J I L ~ I C , Z N I ~ . C - L\.I I ~ , I V , I I L J : ; i ~ r I C! ! i ; i : j i : d ; ; ! l n upon i;?ii cli t0 ! ; z s ~ prr?tl ic:t i o n s , I )ut i t is pri!clsc: ly Ilc!rc L!~;it t ! le p r c s i ! ~ i t l . y i1va.i . l a b L e t l a t n ..-A -...*... c: -.... 1 .1 . - . ',LC. I ( I I C 3 C I , I I , C L I , I C - .

2 '> 2 . i Tlict iiiet:ioi;O~ijF;Y a,ioptei: iii .. I . . . ' . C , . ' I --.- ' -1 .--- c --,. -".....-'- --- l V l l c 2 L I U I I C I W 3 L I I C L T I I I L C r l L L C l l l l J L 3 L J L C -

d i c t i o n s by ;I nurnl~cr o f t c lc l~n- iques . I n t l ~ t ! f i r s t p lace , t h e y i n i s t r y 1 s . . . I - & . . C - - - -....- ..c *- 1- :,,. -,, -,.-. 1 . ' ..,. 1 . - < t l - cl., -- ..-- - - l - ..< .... ^ C C I C I L C ~ L U L L C C . ~ : L I L p i l b ~ L U L L ~ U L ~ I ~ L ~ I ; I I ~ L L C L ~ J I L I L J ~ I I C U W L L I I Llle I 1 1 . L a a 1 . u ~ ~ 3 V L C W U L

p r c s e n t c o n s ~ . ~ ~ ~ i p t i o n I)nsetl o n .its own i n t e 1 : v i . e ~ ~ w i t h i n l p o r t e r s and u s e r s . m,,. l l c - c ~ l l l i i i ~ e t i d ; , in are ~ ; j k i ; ~ j i i j ,;j,ve il "'- -- - - - -" - - - - ' - I1

1,cst e s ~ L l i i i t L e of tiie p r e s e n t and r e c e n t p a s t c:onsuml)tion o f e a c l ~ PfPfT; i n

3.3 'I ' t~il s t u d y tllell ~ O C U S C S OTI IPIF t l t v e l o p m e n t s i n o t l i e r c o u n t r i e s f o r which iirct i ja~l i i i i ; ~ s ?;li-iricu.!.iiily i.ji.11 ticve.lopeii d a t a as a resuit of i ts p r o j er: t .i n v c s t i l : a t i n n s ;and e c n n o ~ i : i c s t l l d i e s . ' I 'hcse c o u n t r i e s h a p p e n t o b e i n a : i i ! ~ ~ i i . a r s t n i r e oi: economic dt:veiuyrneni as Iran atid t rends i n

t h e i r u se o f ,".!?IF art! app.l.ic:~I t o T r a ~ i ' : ; p t -e : ;ent u s e p a t t e r n t o p r o j e c t f u c u r e cirtrnnud for ?mi'. 'i'wo t i i E ic reu i : pi-o j c c t i o n s are obLained w h i c h a r e t l ~ e n co~npi i red wi t h t l ~ e corlr:cbnsris of 1 r a n i ;III estimates o f demand, and a!!,nin a " b e s ~ esr i111.q te'! is tic2riveti froin t i l e s t ! re:;r~its.

i t ev i ew o f Prc:;:;errt. Consuirint i o n

3.4 'I'he views of i:!lportt!rs, u s e r s allti producers o f p r e s e n t mF u s e i n I r a n as expressed t o t h e rniss i .on a r e j:iven i n Arir~ex 2. E x c e p t f o r p o l y e s t e r f i l - w r s tlkcre is good ;Ir;reement ;inlong t i l e s e s o u r c e s . B u t e v e n Eor 1 x ) l y e s t c r f i . b e r s , tile v i e w s ;irr i n a n a r r o w e n o u g h band whose m i d p o i n t s ! i o u l d g i v e a good c s t i r n a t e of tile p r e s e n t dcillantl. l ' he f i g , u r e s given f o r r a y o n stap3.i; c o n s u n i p t j o n v ; j r i e t l by on1 y l 4 Z b u t i n a b s o l u t e terms t h i s ;~rrlorlnts t o 6 ,000 t o n s wl l i c l - I i.s s i f , r l i f i c r l r i t colnpared w i t h t he e s t i m a t e d t o t a l MMF c o n s t ~ m p t i on of 60,000 t o n s .

3.5 1)ec ;p i te thesr! t w o weal< s p o t s , a consurnpt i .on esti.m:ite from l o c a l s o u r c c s co11 Lt.! b e r e l i . l l ~ l y givt.:n a:; :

T a b l e 3.1 : PRESENT *IF CONSUMPTION I N IRAN - ( o p i n i o n of i o c a i s o u r c e s j

F i b e r -- Consumption 13 70

A I . ~ c e l l u l o s i c 4 3 ,500 t o n s

A l l n y l o n ( i n c l . t i re c o r d ) 9,800

A c r y l i c 2,500

T o t a l 59,600

3 , 6 When this i s compared w i t h t h e P I i n i s t r y of Economy's e s t i m a t e s f o r 1967 and 1969 ( s e e page 5) i t is i ~ n m e d i n t e l y o b v i o u s t h a t tile 1969 estimate seems t o be t o o h igh . I ts a c c u r a c y was already ques t - ionet i p rev - i o u s l y . 'l'he problem seems t o l i e i.n e r l ~ l a t j n l : t he t o t a l i m p o r t s o f 64 ,000 t o n s i n t h a t y e a r t o t h e t o t a l consumpt ion .

3.7 One may t h e r e f o r e t r y t o r e c o n s t r u c t t l w 1969 f i g u r e s from t h e 1967 brleakdown and thle m i s s l . o n l s e s t i . m n t e o f t h e 1970 f i . g u r e s . The consumpt ion f i g u r e s f o r i n d i v i d u a l f i b e r s wi.11 be e s t i m a t e d f rom t h e averal:e growth rates i n t h e 1'367 - 1970 p e r i o d . The e x e r c i s e is s t~own i n t h e f o l lowiny, t a b l e :

Year 1967 1970 1969 - - 1'sti.mntc; Min. of Kcon. - Il\I?I) Pl iss ion - ( ( ' : ro l~ t t i Ra te ) C a l c u l a t e d II C e l l u l o s i c 40 ,906 43,500 1.52 42,100

Nylon 6 , OOCI 9 ,800 132 7 ,650

A c r y l i c 860 2 ,500 31 X 1 ,480

Po1yc:ster 000 3 ,800 59X 1 ,500 -.

T o t a l 48,406 59 ,60(.) 5.32 5 2 , 7 3 0

/ I Tnt l iv i t lunl f i h e r s c n l c u l n t c r l bv applv iny , tlic 1967-1070 growth r a t e - - t n t n l f l h e r cnnslirn!)t ion by ~ t l t l i t i i > n .

' 1 ' 1 1 ~ cnl.cul:!trr! t n t n ! f i l ! r b r cnn~:!!~nptic>n lor 1 I ) O O of 1,2,730 tons compares w(?l:l. wi t l l t i re i m p o r t s ( 7 y e a r movi.n;: avcra);;e) of 54,800 t o n s , f a r t h a t . year ; ?'!!e t n ! ? l e r _ ~ u l d t-!!ex-efnre b c cn!?gi!!er~r! tile "bc.sr_ estinlat_p" of present and r e c e n t p a s t conn~lmpti .on of PIIF .Jn Xran, ant1 w . i l l he uscti a s t h e h z ~ i ~ f c r afiplyifiy, trc?flclc .1$!1.relen~rl I-.-.. fin!:! ~ ~ ~ r n r i o n r o 1 ' - - - ' - + - - - - collr>triesi

3.8 'The B;lnk C r o u p is : ~ c c u n ~ n l : l t i l l f : a botly of d e t a i l e d i n f o r n i a t i o n o n MblF - ancl e s p e c i . 3 1 l v synt : l le t ic f i b e r - d e v t i l o p l ~ l e n t s i n a number of i t s mcm- hcr n a t i o n s . A t prc!st:nt i t Ii;is I l ~ f o r m a t i o n o n E.lexico, T u r k e y , T a i w a n , C o l o m l ~ i a , Morocco , K o r e a ant1 I r a n e i . L h e r From IFC p r o j e c t i n v e s t i g a t i o n s o r from lianli e c o n o r ~ l i c s c c t n r m i s s i o n s .

3 . 9 A ~ l e t ; ~ i l c d anal .y: ; is of th:i.s d a t a was ~ n a d e t o q l l a ~ i t i f y t h e ( l e v e l - oplnent and t o d e v e l o p c o r r e l a t i o n s f o r p r c t l i c t i n ~ f u t u r e demand f o r MMF i n s.imi 1.ar c o u n t r i e s . 'i'wo c o r r e l r ~ t i o n s w e r e made:

(a) The f . i b e r consumpt i .on p c r cap.i t:, as i.t i s r e l a t e d t o t h e (%'I' p e r c n p i t.a anc!

( b ) the gl-owt11 r a t e f o r a f i b e r as it: is r e l a t e d t o t h e f i b e r conuum!)t ion p e r c i ip i t a .

3.10 Tht?se t w o c o r r c 1 a t . i o n s q u a n t l f y tile w e l l known f a c t s t h a t hMF c o n s u m p t i o n is c l o s e l y r e l a t e t i wit11 t h e s t a t e o f e c o n o m i c d e v e l o p m e n t o f a c o u n t r y , ancl t h a t tile growti1 r a t e o f an ?!MF is v e r y h i g h u p o n i t s i n i t i a l i ~ l t r o d u c t i o n b u t t h a t t h i s " d e c a y s " a f t e r ;i c e r t a i r i s t a g e of c o n s u m p t i o n .

P r e d i c t i o n of PIIMF Con:;t~nlption i n I r a n

( a ) On tl:e B a s i s o f a CNP and Poprtl n t i o n F o r e c a s t

3.11 I t c a n I)c s l ~ o a m t h a t i l l each i n c l . i v i d u a 1 c o u n t r y , i f o n e p l o t s CN!' per cnlr i ta a r ~ n i n ~ t - E l ! > < ? r cc!!?sun!ption p e r c n p i r n l c ? c r l o g panor 9

--0.-- -..- - C. - T - - ) - s t r n i ! . l i t l i n e r e l - a t i o n s l ~ i p eriicrges for s v n t 1 1 e t i . c f i b e r s . 'l'hus l i n e a r r n l - t i n n c h i n c r.,oro O!>tsi_fi~:! f c ~ . " y ! ~ n , p<>!.yt"ter c:tpnlc, n n l v o c t o r f i l 3 - LL...<*LL,r...>,.* t ' ~ ' -.--- ..,....y--, yv&, - - -bL A -2.-

m e n t , and a c r y l i c s f o r each o f tllc s i x c o u n t r . i e s s t u d i e t i . For c e l l u l o s i c s t!:e re!.nt l n n s l ~ i p s were :lot. I l n e a r , h:!c t!!e trcn:! of t??e re ! .n t ions !~ ips beyond the i.mu~ed i a t e rnnKe o f thc? know11 dntch is rc:;itli ly d e t e c t e d .

3 . 1 2 D a t a f o r f i b e r c o n s ~ ~ n i p t ~ o r i p e r c a p i t a ant1 p e r c a p i t a f o r T -..- is g;..P." I 1 '11' L V C L l

iG 4-1.- L I I C ~ G - l l - , , ; . - . m L < , . L A < , \ V i a ~ ~ , t-:?;le L . - . c . r . , l u.,.7L,, thci vnli;es of F 4 L . - - ,.---,.--- I . L " L L L " L I C 3 U l l l t l -

t i o n d e r i v e d nbovc.

Table 3 . 3 : RELATIONSkIIPIi BE'I'WEICFJ FIREI: CONSUEIPTInN - GNP & PijP-~:i,*TioN IN i-M:j

.- - - y e a r - Uni. t -- i 966 -- iyciii - i ~ 7 0 -

C e l l u l o s i c consrlmpt i o n ' OOO~ t o n [I(.), 9 4 2 . 1 4 3 . 5 P e r C a p i t a ke . I . f ~ l 1.56 1 . 4 8

Nylon Cons. ' 000 t o n 6.0 7 .7 9.8 P e r Cap-l t a kg. 0.238 0.%:;5 0.33b

A c r y l i c Cons. '000 t o n 0.86 P e r C a p i t a k?. . 0.004

P o l y e s t e r ' 000 t o n 0. h Consumption P e r C a p i t a kg. O.O?.4

m o u r c e : IMF, I n t e r n a t i o n a l F i n a n c i a l S t a t i s t i c s .

These d a t a a r e p l o t t e d on l o g lo;; p a p e r and p r e s e n t e d i n F i g u r e 1 . A l t l l oug l~ o n l y 3 p o i n t s a r e g i v e n f o r e a c h f i b e r t h e y d o show t h e l i n e a r r e l a t i o n s h i p r e f e r r e d t o ahove w h i c l ~ c a n h e ex tended hcvond t h e r a n y e of ttie 3 p o i n t s f o r making p r e d i c t i o n s . The danr:er i n u s i n g t l ie e x t e n d e d p l o t l i e s i n t l ~ e h i g h e l a s t i c i t y of p e r c a p i t a consrlmpt i on wi t t i c a p i t a C:PJP. I n o t h e r words a v e r y s m a l l c h a n ~ e i n p e r c a p i t a C:NP r e s u l t s i n a v e r y l a r g e cliange i n p e r c a p i t a consumpt ion . T h e r e f o r e any e r r o r s i n e s t i m a t i n g f u t u r e GNP and pop- u l a t i o l n c o u l d l e a d t o s e r i o u s e r r o r s i n t h e p e r c a p i t a consumpt ion , h e n c e , i n t h e t o t a l demand for a p a r t i c u l a r f i b e r . I n spite o f t h i s d i f f i c u l t y i t is f e l t t h a t t h i s c o r r e l a t i o n p r e s e n t s a u s e f u l t o o l f o r h e l p i n g t o p ro i ec i t f u t u . r e demand.

3.13 I t is I n t e r e s t i . n y . t o n o t e t l l a t t h e r e l . 2 t ions l1 ip f o r c e l . l u l o s i c f l . b e r :is t h e r e v e r s e o f t h a t f o r t h e s y n t h e t i c f i b e r s . T h i s was a l s o d e t e c t e d f o r o t h e r c o u n t r i . c s , p a r t i c u l a r l y tliose showing a s i m i l a r s t a g e and r a t e o f tlc.velopinc?nt as I r n n . I n o r l ~ e r words as t h e economy d e v e l o p s , so does t h e consumpt:Lon of cellulosic f i h e r s tends t o clrop o f f .

3 - 1 4 IJsinr F i g u r e 1 ant1 n r o i e c t i o n s matlc bv tile r e c e n t !Jorld Ilank economj c n l i s s ion t o Xrnn o f tlie C:t.ll' ant1 p o p i i l n t l o r ~ , f u t r t r e tlenland f o r PP1F can he c n l c ~ i l n t e r l 3 s s l l o ~ ~ n h c l o ~ . ~ .

T a b l e 3 . 4 : M?f17 1)E)iANI) - - - - - - .- - - . . - ( f r o m p o p u l a t i o n EY CdVP pro-j e c t i o n s )

U n i t - . - .-

P o p u l a t i o n ~i l l i o n s 2 0 . 2 311 . 0

?MF der11;tnd p e r c ap i t , a k;: . -- -- ---.A A ----

$ I, i 1.1 i o n !+ . 2 8 . 0 15 .1 11.8 $ 3 1 0 305 4 4 4 3/17

Nylon A c r y I i 1 2 Pol.vcster C c ~ l l u 1 o s i . c

PD.!F clelnanrl ' r o t a 2 -.-- - - --- - lr!On tons

Nylon Acryl.i!: P o l . y e s t e r C.cllulrjsic

3,!5 'r\.ro predic! : i r>ns :;re g i v L - n GN!' :!eper!:!.i,fiR or; whit!; ~ , ? y t!?e economy w i l l d e v e l o p o v e r t h e n e x t y e a r s . 'I't~e I3;lnk I:; m i s s i o n fe l t I r a n $:ill f::ce t!!:? n!tcr~::?t!vc nf e! t ! ;ar c:~:!t!!:::',nr: :ri.t!: .its I:!;:!: rate cf d e 1 ~ c l o p f i l e n t ,and t a k i n g s tep! ; t o c o v c r . i ts ~ ) o t e n t ticf i c i t i n i t s f o r r i g 1 1 -- it w.l !.l rc::tr!ct ;!ct.e.?::p:~:e:;C i;; o;i!b%r to slLoc; Jaw;; i . t s exc!:nn;:e ac::::unt , .., r e q u f . r c ~ m e n t s f o r f o r t r i :;n c l e v c L o p ~ ! ~ e n t c a p LtaL. I c is li . l :r l y t i l a t i n tllc nex t f i.vc ;?czrs I~zD. w.i L! te!?cj t r ! ct!::ase the fo!-!qcr ::ot:rs:: an:! t !?nt t!!e

GIdP will tc?ncl t o h e ( : l o s e r t o t l ~ c "1) i ; :htr v . ? l . ~ ~ e . 7 '11~ (:MP f o r 1970 wil 1 pro!>,?h!.y !:c !:etweer! !r!:e t w c IJ;:.?!:~.': fen.

7 1 1. .,. I ' I predic!:tn:y: fi!:pr i!cr:inr;tl L... s p y + I . : L a .- ...-r~.... I - I ..... ., .. !nrge (1- i ! ;crepn~~cv :i.n t l ~ c p o l y e s t l c r forcc:~: ; t . ' ~ ' I I c p x c t l i c t ions f o r t h e o t h c r f ibers c n n m t r . t ; ~ * - r x . . - ~ ~ ~ - L 1 n l - n . ~ . * l . . r i - F-r . . , . l . . f ir+ ,ir - 1 . .... r . > L L S ~ ~ LI., r - . a t . > ~ r t c a u , ~ r , u r ! s t L I , . ~ L 1 1 1 1 . j , ~ , . a . y r i > ~ < . ~ , ~ I I I Z I * ; >

!iAi. I.^'. h; "1. . . - I . . - L l J O LILt; l l V U L U C :

t o b e t:rrl.qted. The I:ea.zon o f coursc.1 is t h a t t h e e l ; l s - ; t ' i c i t y o f t l ~ e p o l y e s t e r ,.,.,-.--I - , + I , - . - ;.-. +I.,-. ~ 4 , . 1 ~ ~ ~ . , - ,.I: ..'I I +-I.,. c:I . - - - r . . :- . . I - , . . . . t . c i . 1 . ~ 8 . i ) O J ~ , , iiiterestiiig to n n t e t h a t thc ~ ) r c t l i c t : i . o n sllowr.; a clrop oCf :In t l ~ e c o n s u m p t i o n o f c e l l u l . o s i c fi .bcrs w!;?zh rc..;u.i.ts f rnn; ::!if ne;;,?ti.vc coi-re: l ; i~ inf i s l i w n i i i F.fj;iire 1 , For tile momcnt this r e s u l t wt1 .1 . 1)e i\l.lo!.~etl Lo !;ti\nd whil.c! another metllod is explored t o j jro,ject f'ilier dci-il.?iid.

3 - 1 7 m L - L - _ , ' ~ r ~ c : o n s l c ciatn u s e d iii tire p r c v i 0 8 s e c t i o n is a l s o u s e d t o c o r r e l a ! t c thc! r n t c of g r o w t h of I.lf.11' dcrl~nncl wi t11 consurnpt ion p e r c a p i t a .

' I ' i i i s c o r r c l a t i o r : dctinoustrntc.!:; LIlc wcl . l . - . . I<~.r iu~~~ f r ic t t . i ~ ; i t tlie r n t e of j:rowtl~ of an m.1F tentls t o s l o w C I ~ ~ J I , ; l r tcr i 1:s i .n i C i ; ~ l . i n t roc luc t ion i l l ;I p;irti(:r~l.;lr c o u n t r y .

3.111 'Thuri t ~ i > ! , l ~ ~ ; rowt l l r a t e s a r e ol)sc>rvetl n t low v ; ~ l u e s o f p e r capita c o n s u n ~ p t i o n . A s t l ~ e cor l s~ lml~t ior i . i n c r e ; ~ s e s t h e }?rowt l~ rate d r o p s o f f r a p i d l y and the11 st'cciclic>s o u t t o n f ; ~ i r l y I e v e l v a l u e . Althougli tllis plienon~ena is c l . e a r l v i l l u s t r a t e d , t h e t1er;re.e o f c o r r e l a t i o n is n o t a s h i g h :IS fo r the .prc?viuus c o r r e l ; ~ t i o n of ( lNP an11 C O " S I _ I I I I ? ~ ~ OI? per cani t n - However9

i t is c l e a r erioup;h t o ; ~ ~ . L O W t h e f o l l o w i n g o 1 ) s e r v a t i o n s t o b e made:

( a ) For e a c h f i l j c r a f a i r l y w e l l - - d e f i n e d " t r a n s i t i o n r a n g e " i.: fuund 111 w!!.i.c!! t!!e r n t e o f ! : rowth o f demand c!?anges r a p i d l y from v e r y 1iii:h v n l u e s t o rnnre c o n s t a n t v a l u e s .

(b) The t r a n s i t i o n ran$!e o c c u r s rouf:hly be tween 0 . 2 and !!.4 L , i l q ; r ~ ! z s per m p i t r ? fnr t!:e three f l . b e r s s t u d i e d , nnnlclv, n y l o n , p o l y e s t e r and a c r y l i c .

( c ) \dl>cn t h e p e r capi ta c o n s u n ~ p t i o n is lower t h a n t h a t of t r a ~ s i t f n ? ! rz!!r,e, ti!.. i;ro~;lt!l r;!tc ~ c n d s t o !?c verv !ligh

b11t u s u a l l y n o t more t!tnri 50-150" p e r y e a r o v e r a number r.6 , r n . . , - c "' J C < A . '3 '

( d l 1.11 .,,.. +-I.,. ..,,- ,. .... - i b - , ,.,.., ...., l,.rt;r\.- r - i r , . . . . i t h j r . t h n + ~ . . ~ ~ i t i , . - " " , , C , X L,,C ,,L, L < , [ r , L . . T L . , ~ , . , ~ Z ' . , , ~ L ~ ~ ~ t I L > X - . > w > L 8 a A n ' L L L L L L ' X , ' C , A L L " K L

T;111)!,C t h e ~:rnwt:ti r n t e f o r e n c l ~ o f t i le f i b e r s is as f o l l o w s :

Nyl on 14--252 p e r y e a r I > - 1 ..,.-.. -- ,,(, ]')", I 1 'I I UJ y C 3 1 . C I L q , J - J L / a

A c r y l i c 1 2 - 2 2 ~ ,I ,I

( e ) W e n t h e p e r c a p i t a consumpt ion h a s gone beyond t h e t r a n s i t i o n raiij:e tiie rate of f:roiqth f o r "Lie f i b e r t e n d s t o b e f a i r l y steady - t lre v a l u e f o r e a c h o f t h e f i b e r s b e i n g a s i o . i l o w s :

. ,. Nylon 1 \ ) - I -52; p e r y e a r P o l y e s t e r 1 ) " "

. . !! !! Acry i ic 111.- 12.:

3 . i 9 i t w i i i bt. rec; i . i ied frc:?m p r e v i o u s t a i ~ i e s o f Iran's f i b e r consuml>tion t h a t thc: ny.Lon c o n s r ~ m p t i on is p r e s e n t 1 y j u s t w i t h i n t h e " t r ; * n s i ~ l o n r ange" w l ~ e r c a u a c r y l i c arlti pn iyc!s te r a r e w e i i be low t h e t r a n s i t i o ~ ~ r n n p e . 'The g l : o ~ ~ ~ l ~ r a t e s ca l cu l a t t ! t l f o r t h e p e r i o d 1966-1 9 7 0 f o r t h e s e f i b e r - s con1 irni t t l t : g ene ra l . c o n c l u s i o n s ~ n c n t i o n e d above , namely , t l ~ n t n y l o n ' s growth r a t e i s a b o u t 13% per y e a r wilereas t h o s e f o r a c r y l i c and p o l y e s t e r a r e 314 and 53X p e r y e a r r e s p e c t i v e l y .

3 .20 I n t h e f u t u r e , when t l te p c r c a p i t a consumpt ion i n c r e a s ' e s o n e can e x p e c t t l l n t t h e ;:rotrt:l~ r n t e wi1.l d r o p o f f a c c o r d i n g t o t h e above conc1u:; ions. 11; f a c t , ny lon proh:tl~.l:v i s a l r e a d y ; ~ t t h e s t e a d y growth

ra te p h a s e and the f u t u r e growth r a t e s f o r t h i s f i b e r would p r o h a b i y h e a round t h e 10% p e r annum mark. Both a c r v l i c and p o l y e s t e r c a n be e x p e c t e d t o go i n t o and beyond t h e t r a n s i t i o n r a n g e w i . t h i n t h e n e x t f i v e y c a r s a c c o r d i n g t o t h e p r o j e c t i o n s o f per c a p i t a consumpt ion derived from t l w GNP p r e d i c t f o n s . Thus p o l y e s t e r consumpt:ion w i l l p r o b a b l y d r o p from i t s h i g h ra te o f 59% p e r y e a r t o someth inf : be tween 20 and 322 p e r y e a r i n tht! n e x t few y e a r s and t:hcn a s the consumpt ion i n c r e a s e s t \ r : i l l d r o p f u r t h e r t o t h e 12-20% p e r y e a r rmlge . I:y t h e snnlc? t o k e n , thc r,rowtll rikte o f ncry1.i.c c a n h c e x p e c ~ t e d t o d r o p from i t s p r e s e n t r n t c of 31% p e r y e a r t o t h e 12-22% pc?r y e a r ranp,e b u t possib1.y n o t much more below t h i s i n t h e n e x t f i v e y c a r s .

3.21 From t h e EI\)OVC a i ~ n l y s i s one m;ly ntte111pt t o p r e d i c t t h e poss ih l c ! g rowth r a t e s f o r t h c s e f i b e r s o v e r t h e n e x t F ive y e a r s as shown i n t h e f o l l o w i n g t a h l e :

T a b l e 3.5: ESTIMATEO C.RO\~I?'II RATE 01: SYNrhlETTC FIUEP I N I R A N -- ---.--- ( X p e t y e a r )

P e r i o d --- Nylon l'c~.lycs t e c

On t h e b: i s l s of t l l e sc i l l d i c n t i v c r:rowtll r n t r q tlrc t o t a l demand f o r t h e f ihcrs can h e cn lau la tcd h : ~ r r d nrl t l ~ ~ 1070 rie~nnnrj est-imate on p,qg~_ 23 as shown below :

Table 3 . 6 : DEMAND FOR SYNTIIIITIC PTREItS -- R.AS!?T! ON U?!!W'!'!! R-AT!. PRI.';!!?.CTI ONS

( '000 t o n s )

Year Nylon - P o l y e s t e r -- ----- A c r y l i c

' r! ; i~ pTC?j ti<:^ ~ ! ! c v ~ d c ! q z ~ d fcl. nn lvoc ,..,A*- .... tor - - % f e y 197-5 c o n i d ~ r a h l y belew t h c mean v n l u e p r e d i c t e d on t l ~ e bns i r ; o f CNI ' ant1 p o p u l a t i o n ( 'Table 3 .4) -n , l t l . r a c e mnre ra-enncnhln n + n . l a , - + f c r r , fiIJfic t ! ? ~ 1975 :!efi!~n:! fGrecasc fo r 1 1 I . 1 . C I I . Y . 7 U 1, ,.... \. L I - , L I I Z I . L C I I I L C . y. . I ,I-LI- ..I I.. . nyJ.on and a c r y l i c co r r e sponc l s r a t h e r c l o s c l y t o thc? nrcnn v a l u e s o b t a i n e d 4 ~ . 'Pnh 1 r, 7 /. A,, ..<,I, n.X~- ,, . -. . 3 . 2 2 ' T - t .. wat? e m --+ &~!PL ......m4!.ln i,w:.,ta~ I , nc; +,.. L S J ,.-.-v.. < . , s t L y - . .I- LJUL. ;? > . L I ~ O , .4,,.: L la.- ~ r . 8 ACT^ ~~,..-,,l L . L > T . -.-. Ge- ~ t . 8 1 LC ,.-1 &,.L.uJ< l . . l , : n 4 n - A \ .

f ii,ers b u r a.n a n n l y s i s of wor1.d c1:ltn s l ~ o w s tlint. c e . l l u 1 o s i c C Lber cons~lmp-- + J -- -.---. L l u r l SlL c w a t ~ilioiit 6:& pc r aiiiiiiiii cliirii-ic ttie p c t i oil 1!:fjO-196.5. iiocjever, t h i s d ropped d r a m n t i ~ z a l l y t o 1.5X pc.r nnnuol from l9h.5-1969 ( i n N e s t e r n 1 , L L ~ _ _ _ - _ . . ~ 1 _ 1 _ _ - _ _ 1 . . ~ _ 1 1.. L _ - . _ _ L _ I . _ _ I : L I L U ! J ~ L [ I ~ ) ; L U W L I I raLe ~ ~ i i s ~ ~ C L U ; I I I Y rlec:cllile 1 let ; i iL lvc 35 ~~i i s i i i i ip t io i i h a s droppet l o f f rind rayon p l a n t s have c l o s e d down i n r e c e n t y e a r s ) .

'j - 2 3 '!'!le w g r l r ! .si ~ ~ ~ : ~ t j o ! ! sce!!;c: t o r.r?gfi rm c!!e n r r ~ x r i ~ ~ g ~.cfi~-'\?.s?~::~ 1- '- .

t l ~ i ~ t c e l l u 1 o s i . c f i.l)cr c o n s ~ ~ r n p t . i r ) n j n Zrnn wou:ltl j;rnw v e r y s l .owly i f a t a 1 .-..- a n I .., .,.,.. _ r - . - . I r . l f r i U..-A .... - . !:YQ[!? p,;:~!wt!~ ~ ; : L C co:?sic!prati=ns, t!;erefDre, one miglit s a y t l- iat cc!ll.ul.o:;i c f.i.l)cr cons~t lnl>tf on o v e r t h e n e x t f i v e y e a r s woul:j ten:! TQ .c,tc?nd sti1.l at t!?c .j;;lue - c - ~ . ' v - - t - A F - w ' 1 0 7 f b

G.7 L .L I I I . L C L \ I L "L I , , \, .

'I ') /. J . L - 1

'I%,.. ,L....,-, t .... ,,,,~i..t:,,., Of hm.m ,1,.,.,,,1 a , T,,.. ,,, ,-.. I l r a r c l u t , v ~ . L ~ ~ U I I ILCIJLLL ~ " t 1 . 1 a 11 1 1 u ~ ~ t ~ t a l l l l L I I L L U L L CLL c L L V W I - U I I I ~ ~ L cu

wit!) deliland e : ; t i n i a t e s g . ivcn t o t h c n i i s s i o n I)v 'Ir:~nLan s o u r c e s t o make w h a t iii,i:l!it be tcrmc,+ a "I.--+ -.-t 4 .-..'A" L.. '1.- . - 4 .-.-: -4 v c r > c L 3 L l . l l l " L C I l y LLlC I l l l . - , . , l U ' l .

'> ') 1: J . I J

As iii '1.- ---, ,C --..- ,..-e ..-..,....-- e: --. -c x m r ~ L L - T _ _ _ . _ z _ _ Lire LQ:,C- C I I ~ L C . > C : L I L L V L I ~ L L I I I I ) L I . U I I I I L I - ~ I - I J , ~ilr L L ~ L ~ L ~ I I

s o u r c e s showcd a s u r ? r i . s i n g de5;rce of cnl-lsensrls i n t h c l r estimates f o r fiiture ;T:F denaiiij, alt/joiigii iioj yeF;t-r demand sliowed 'itie

a n d p r e d i c t i o n s 0.f c e l l . u l o s . i c cleill;ind t e n d e d t o be r a t h e r vague . 'rhe cIr ), "t ilje cs'i ii:iates '-- - - f o ~ ~ o w i i i g t a [ ! i . e siiovs ;i s,liilill:----- ( s e e Annex 2 f o r d e i a i i u j :

v.3 nl, 7 7 . 3 .7 : " """ " " " 7 " " 'A'" """ A . 7 " 4 ," "

- - - -- -- - - 1 ~ I ' ~ I ~ I I I I. I CII IVl1'II Ill',i'lAIVII - I Y I 3

( b y 1r ; lnf nrl Sourc :c s )

idyl.on y a r n Nylon t - i r e cnrci T o t a l nv Lon

P o l v c s t e r stap1.c: P o l y c s t c r f i l . amcn t Total polvc.s t e r

Oclr~anci Growth Kate L o n s . - . . . .. . - . -. . --- X p e r Year

- - -- .- -- - . -- . . -. .- -- - - --- - . -- -- . . . - - -- .- -- - / I - hss!:::::::; ;:!I t i :-cs w i 1 . l bc m.?de I!?cal.ly LIS?..~!~ locall;;-s::pp!.i& tire

cord .

3 . 2 6 T h e t h r e e estinates o f f u t u r e FPIF demand are now shown sicle by s i d e :

T a b l e 3 . 8 : ESTIPIATES OF EIfF DI:F.II\ND I N 'IPAN IN 1075 ------ ( t o n s )

E s t i m n te A - - - - - - I:..; t i r!in te H - - -. - - - - - - - E:;t - --- inlate C: =

(llig11 V a l u e )

~ e l l u l o s i . c 4 ~ : , 2 0 0 31, .ooo 4 3 , ~ ~ N y l o n 16,800 10 , (!OU 16,390 I\cryli . i : 7 , 6OO 11 ,000 7 , 9 0 0 1'o.Ivc: ter -- 10,000

, - - ho,OOO . . - - . .. ---.- 17,700

T o t a l 87 ,G('IO 105 ,i(OO $ 4 ,900

).:st.imate A - Cot~sen::us o f V a r i o u s I r a n i a n S o u r c e s ISsti.n~ate H - Fro111 CidP h I'o1)u.l n t i o n Precli c t i o n s I l s t i m a t e C - From Crowell Kate P r e d l c t lo l l s

3.27 The c o m p a r i s o n sllows t h a t t l 1 ~ c c ~ ~ ~ s c ~ i s u s of I r n n i . a n v - iews agree:; c l o s e l y w i t h tlrc e 3 t : i m n t c ~ r c p a r e c l frnrn ~ r o w t h r a t c p r c ( l i c t i o n s . The e s t i - m a t e prc.pnred f rom CI\IP ant1 p o p ~ i l . a t i . o n p r e r l i . c t i o n s is n o t as close t o these two v z i l u e s . f Iowever . i t : musr be reniern1)ered t h a t t h i s e s t i m a t e was p r e p a r e d f rom tlic " h i , q h " v a l u e 0 1 ' t l ~ r ? CNT' p r e d i c t i o n of 1975. I f a lowel- v a l u e w a s take11 - F o r i n s t a n c e r11e rni.tlpoirlt t )c*tv~ecn t l i c h i g h a n d t h e low e s t i m a t e s - one would o h t n - i n prec1ic: t ions of f i bc r c o n s ~ ~ m p t . i n n tl!;it would be muc.11 c l o s e r t o the two o t l ~ e r p r e c l i c tion::, n;>irlcly:

tons - - .- -. -.

Nylon 16,50(1

3.2:; O~ic ~nl. ; :ht t h e r c f o r e s n y t h : ~ t t l ~ c s e s t - i l a a t c s slto[.rn u n d e r A ;~ncl C n!,r>vcr re?'!.ect 2 CCRSC rlvc?C! ~j ~ 1 . : r o!: t !?r : c!~?n~,?!?c!, b!!t t!!2t i . f t !!c ecrrnGn!v

sIro111d m n i n t n l n i t s p r e s e n t f a s t r n t c of g r o w t l ~ .ic is l i k e l y t l ~ n t tllc est-i.!!!-?te g:!ver! u n d e r !! crx:ld !!c n t t n i ! ? e ~ ! . !t!!~!!.e t,!:cse stnt-e!!!c.nrc !:nld w!. t !? hif:ll re1ial j - i l i t y for nv Lon ant1 nc ry l . i c , t l l cy arc! n o t :IS re1 i a b l e f o r cel .l.u- Inpi , . ,,>,1 ,,fir,, .,nrnl i m l , l n ,nr l i:; t ! ! ~ ? . , ~ S C cf i 'cl:vrpfit~r. Scme i ; : t u i , t j x ~ c L I I . I LC- "..%A . I - , . . y I..,,. I..'. L . I I I 8 .- ,XI ."

. judgcincnt t h c r c f o r e n c e t l s t o I>(-, m n d r ! t o t h e e s t i ~ i i n t c s f o r thes t -? two f i b e r s , .,i,.: W , ( * <.,, ,-.I, f S do;;e !;elo;,; iE t;;h.le , . I , ' ,. .,., ,-l.n-.l",>e +.I.*. c,.*n,.m.t..,.. -.,,...-.,-,., 4-,.

bvgo t <.'.!i a \ 4 1 ~ 8 ~ < : 3 ~ 6 . t ~ 4 8 ~ J . T P L \ . , ; \ T L L ~ ~ C A C L L > ~ < . 6."

give.! t h c m i s s i o n ' s b e s t e:; t lnl . i tc o f I ' I J ~ I I ~ - e t lc~~lnrld fo r PPlF i .n I r a n . 't'l~c. +-1.1- . . I - - -I.-..,. +I.,. - . . . . r . , . e r + . 4 ~ . , - F .I-..,.-...l ..-.... t l - . .-..r,. L . n . . F I . . . l l n 7 C L C I I J I L : C l J . i > l J . > I I I I \ V i ) L L I C : C , i ! ' < ; I - L . . I L I * ' I I 111. I l f l ' l r l l l l l ?;I 1 I W L I I I C ' I L C I L ' C . Y l . I L I U 1 7 1 J .

Growth K a t e Fi!2zr f , . , , uv L L . ) 1 . . Y ~ . C L r V X . I t I ~ . J C J I I I L I L G I t !!nt i n > i c t 4 ir. I I ' c . t . I n r q C r 3 . n v v - v . r l 1 0 7 r: - .- - . .- - - ._ _ . .. .- -. .. .. . 1 - ' !LFY " " ~ l I . -

3 .29 Thc m;ljnr u n c e r t i - ~ i n t y i r l t l~ i s p r e d i c t i o n , as has been s t a t e d r ~ p e , ? t e d l y ; ~ l ) o v e , 1 i . e ~ i l l t i l e f o r e c a s t , o f c e l l u 1 o s i . c and p o l y e s t e r c o n s u m p t i o n . T h e u s e o f t l~ese two f i b e r : ; i s t l i r c c t 1 . y i r ~ t e r r e l n t c t f w i t h t h a t o f c o t t o n as t h e tliree fi.ljers are d . i r c c t c o m p e t i t o r s . A t t h e moment c e l l u l o s i c s h a v e a t leci t led edge .i.n I r i ~ n wllerc I'or I ~ i s t o r i c ariJ pro1~;ibl.v c u l t u r a l r e a s o n s t h e y Irave lon;; 111;:c:n d c ~ i ~ ; ~ n d e ~ l . ilowc:vcr t - l l c : t e c h r ~ i call a d v a n t a g e s o f p o l y e s t e r a r c h e c o n i i ~ ~ l ; more a r~ t l rnare ;ipr);lrent- fo r e a s y (:;Ire f a t ) r : i c s and a s p o l y e s t e r p r i . c e s d e c r e a s e i t c a n be e:cpclctetl t l l a t pol v c s t c r w i l . 1 1)e s u 1 ) s t i t u t e d f o r r a y o n . I l n i ~ e v e r i t \.411.1 be some t i l l i t ! bet cre p o l y e s t e r c a n c o m p e t e d i r e c t l y w i t h r s v o n on a p r i c e b a s i s , a t ~ t l t l ~ e b1l i1 . t - in r e l u c t a n c e t o c h a n g e of t h e older mnnagernents o f many o f t h c 1 r~ l i1 i : in t e x t i l e r n i 1 . L ~ coul.ti s l o w down t h e i n t r o - d u c t i o n of pc11yc:ster.

3 -39 I f a t t h e s,~me tj.rile c o t t o l l q u a l i t y i n tile m i l . 1 ~ is i m p r o v e d and c o t t o n p r i c e s s t a v a t , o r f a l l . b c l o w t h e i r p r e s e n t l c v e l s , a n o t h e r c o m p e t i - t i v e e l e m e n t is i n t r o d u c e d . T h i s would p r o b a b l y h n v e t h e e f f e c t o f r e d u c i n g demand f o r c c l l u l . o s i c s a:; t r i . rher q u i l l i t y c o t t o n b l e n d e d w i t h p o l y e s t e r c o u l d p r o d u c e f i n o f a l j r i c:i t h a t would cor11mantl h j . , ? l ~ e r p r i c e s , t h a n c o t t o n / r a v o n b l e n d s . Tlli:; i n t e r - f i h c r c o s i p e t i . t i o n is c l e a r l y n m a t t e r w h i c h needs t o be gone i n t o i n ) ? r e a t e , r d e p t h and i t i:; recommended t h a t a s t u d y b e c o m m i s s i o n e d bv tlie P1inir;ttry c ) f Econooly o n t h i s p o i n t as s o o n as p o s s i b l e .

3.31 The s t u d y wolll.13 b e q j n wit11 a f i b e r u s e s u r v e y t o e s t a b l i s h t h e present f i - h c r b a l a n c e i ~ n I r a n and u s e r s ' e x p e c t a t l . o n s o f f u t u r e u s e . I t would t h e n l o o k i n t o tile r e l a t i v e ccor iomics o f f a b r i c p r o d u c t i o n f r o m v a r i o u s f i b e r blends; P a r t i c u l a r f o c u s woultl be drawn 013 tl!e c n t t o n / r a y ~ n / ~ a l ~ ~ s t ~ r s e c t o r . The p o s s i b i . 1 ity of e x p o r t i n g f i -ne f a b r i c s rlsi.ng h i g h q u a l i t y c o t t o n / pc! lyes ter !,:!ends wo~.?!.~.! a?sn be i ! w e s t i g n t c c ! = I n I! g!?t nf t h e relit jyp_

e c o n o m i c s o f p r o d u c i r l c arid s e l l i n g f n b r l c s o f t1i.f f e r e n t f . f b e r b l e n d s i t :;!:o;:?d !,t. ;?:,,,j!,!,e t o :!,.ivr: 2 2: ; tn 1 . i S p l ~ .? i lcs~lnlnnrnent-c ~ ' - - % - - - I . . . . . - . . -- jn d~r?;:~:! f o r the: v ; l r . i o ~ i s fi.i)el-:;. :I1 t e r r l n t i v e l y a v i . cv~ r?.i;:ht: a.Lso b e gi .vcn a s t o

1.~11 n t s t nn t l t h e Covt..rrlrnc?.n t nli g h t t a k e I n pronlot in^ o r d i s c o u r a g i n g the u s e of 2 c c r t ~ j n f:!l.cr. i p ~ e i ! ~ v ~ ~ C ~ ~ ! e ~ ~ s t u c ! ~ c!atn !!ect has !>pe!l ;>r-parr.d clescril)in!: t h e s t u d y i n more d c t a i . 1 (Annc?x 0 ) . I t s l~ows t h a t tlle s t u d y < : ~ u l d !?e !:n~!p!eCc:! i:? s!x mo!?l'!!s i?!:~! !:rnt!Ld c n s t ,?!?!!~t $30,0C-I!!. Tt is f e l t that apar l t front t l i r : r:rll!latic:t: of one Fc)rei i !n rnnrketi.n;: expert, the study can !:e d=::e wit!; loca!. rc:;o::rc:::; .

4.1 Two c l e a r c o n c l u s i o n s emerge from t h e demand s u r v e y - f i r s t , t h e demand f=r syxt!:eCics is grewixg rai:i:!ly, will c=n!--xue t= d= a w nn U L L U qmll r v m . . l WVYIU A

seem t o p r o v i d e a b a s e f o r economic l o c a l p r o d u c t i o n ; and second , t h e demand f n v 0-1 l v n l n e 4 ~ 0 is A n ~ l 4 n < n n n . ~ ; 1 1 nvnh-hl-7 n n n t 4 - 9 n e t n A n m n - 1 t L f i . . m h L V L C L A . A U A V . ~ I L O U L C I A I ~ L L ~ ~ a..u r n r r r y ~ v u a u r j L W L . L A L ~ U ~ ; LW uv o w C Z A L ~ I V U ~ ~ ~ . ,

on t h e o t h e r hand, ttie a b s o l u t e l e v e l of demand w i l l remain h i g h f o r some t.;".c, tr. PA...- L I I I 1 Z . L" C V L L L Z .

1. 3 v . L TI.- 4 - - 1 3 -...f-J--- - C +I.- , . - ,.,...,. I..-:,.-- I L I C I I I I ~ I A A C ~ C L U L I D UI

L l l L a c ,CLuD A ofi ha.,. CA""Jl .4 1 a t . . A C --.---- 1 L I L C I G a a A u A A A L y UI c n y a u u -

i n s !$IF p r o d u c t i o n is examined i n t h i s c l iapter a g a i n s t a number of c r i t e r i a . F i i s t l j ; , t h e i i i i~ii i i i i i i i i ecoiiiiiiric size of !.%:F j i l ~ n t s 1s coiipareb w i t h Zraii 's be- mand. Secondly , t h e c o s t oE l o c a l product ion is compared w i t h t h e c . i . f . - 2 - c ; - r p 1 . J - 1 1 - - *I.- -..-- ..-..<.- - C -,.---.. -- ..-,I - - - J . - - l ---.. J--.l ~ L I L C U L A I I L ~ U L C ~ . I I I I L U I Y , L I I C L C ~ U U L L C D UI ~ I I ~ ~ ~ u w c L a l ~ u C a p ~ ~ c l ~ L T ~ U I L C U

t o expand t h e c a p a c i t y , and t h e i r a v a i l a b i l i t y i n I r a n are d i s c u s s e d and Ll l lY exaiiiiilation is i n a ~ e of . - I . , . . - r - ~ - - -c ---- d1-1 L-..-..L 1 - -

L I I C L I I I I L L ~ # U L ~ ) V > Z , I I J I ~ PiXF --- '--*- ~ L U J C L L J .

"7,- L l l r chapter conciu(jes witi l a descript ion "f c-urrent ii,-vest-gati"i,s

i n t o ?EIF p r o j e c t s .

Economic S i z e of MPIF P l a n t s

4.3 I t is probably i m p o s s i b l e t o r i g i d l y d e f i n e and c a l c u l a t e t h e "minimum economic s i z e " of a Wii;' ( o r any o t i ~ c r j p i a n t i n a real wurid where i a c - t o r s of p r o d u c t i o n , o t h e r tlran s i z e , have such a wide r a n g e of c o s t s . Never- t i l e l e s s , i t is commo~iiy recogn iaed tha t ecol:ornies of. scale a p p l y t o bWF p l a n t s , p a r t i c u l a r l y i n t h e "chemical p l a n t " where t h e raw m a t e r i a l s a r e creaced LO become s p i n n a b i e polymers.

4 .4 A rough r u i c of ci~umb - d e r i v e d from Bank e x p e r i e n c e w i t h o t h e r bIMF p l a n t s - i n d i c a t e s t h a t i n tlie c a s e of s y n t h e t i c f i b e r s , a p l a n t w i t h a c a p a c i t y of 8-10,000 t o n s per yea r s i ~ o u i d be a b i e t o compete i n t e r n a t i o n - a l l y . T h i s seemed t o ho ld even when t h e c a p a c i t y was d i v i d e d among 2 o r 3 d i f f e r e n t f i b e r s o r f i b e r t y p e s . No such "ruie!! h a s been d e r i v e d f o r c e i - l u l o s i c p l a n t s .

4.5 I n o r d e r t o t e s t t l~is r u l e of tliurnb, and t o g e t a n i n d i c a t i o n of t h e economic s i z e f o r c e l l u L o s i c p l a n t s , a s t u d y was made of M F p l a n t ca- p a c i t y around t h e world . (See Annex 3 ) . I t showed t h a t f o r a c o u n t r y t o be c o m p e t i t i v e i n c e l l u l o s i c f i b e r s its a v e r a g e p l a n t s i z e shou ld n o t b e less t h a n 10,000 t o n s l y r . , b u t would probably be around 18,000 t o n s l y r . and i d e a l l y would b e more than 25,000 t o n s l y r . I n t h e c a s e of s y n t h e t i c s , t h e minimum s i z e of a c o m p e t i t i v e c o u n t r y ' s a v e r a g e p l a n t would b e 5 ,000 t o n s / y r . , b u t was more l i k e l y t o be 7,000 t o n s / y r . , and t o be r e a l l y com- p e t i t i v e would b e more than 14,000 t o n s l y r .

4.6 Although t h e r e s u l t s r e f e r t o a v e r a g e p l a n t s i z e f o r each c o u n t r y - r a t h e r t h a n an a b s o l u t e a v e r a g e o r median p l a n t s i z e - they do g i v e a n i n - d i c a t i o n of t h e r a n g e of p l a n t s i z e s a c o u n t r y should have i f i t is t o com- p e t e w i t h t h e e s t a b l i s h e d :+IF i n d u s t r i e s .

4.7 Iran w i l l c l e a r l y have enough demand f o r each liMF by 1975 t o sup- p o r t e ~ ~ o n o m i c a l l y si :zed p l a n t s . Th i s is e s p e c i a l l y t r u e f o r t h e s y n t h e t i c s which a r e expec ted t o grow beyond 1975. Even i n t h e c a s e of c e l l u l o s i c s , t h e demand would d r o p t o t h e t o p of t h e range of a v e r a g e economlc s i z e p l a n t s (25,000 t o n s l y r . ) o n l y i n 27 y e a r s g i v e n a 1ZIyr . r a t e of d e c r e a s e i n demand beyond 1975. (If th'e d e c r e a s e were s a y 5X/yr. , the 25,000 mark would b e reached i n 9 y e a r s ) . I f t h e economic p l a n t s i z e i:; talten a s t t i a t i n t h e mid- d l e of t h e r a n g e g i v e n above, one could p o s t u l a t e t h e f o l l o w i n g f u t u r e f o r 1rani.a:n p r o d u c t i o n in 1975.

C e l l u l o s i c Nylon A c r y l i c P o l y e s t e r - -

Economic P l a n t S i z e 18,000 8 ,000 8,000 8 ,000 t / y r

I r a n i a n Demand 1975 ( c o n s e r v a t i v e )

Approximate Number of Economic P l a n t s 2 2 1 2

I n o t h e r words, I r a n could possib.ly s u p p o r t 7 FFIF p l a n t s by 1975 i f demand a l o n e is c o n s i d e r e d .

P r o d u c t i o n Economics - S y n t h e t i c F i b e r

4 .8 Using d a t a a v a i l a b l e from Rank i n v e s t i g a t i o n s i n t o s y n t h e t i c f i b e r p r o j e c t s , a s e t of p r e l i m i n a r y e s t i m a t e s were made of t h e c o s t of producing s y n t h e t i c f i b e r i n I r a n . I t nlusl: be emphasized t h a t t l lese e s t i m a t e s c a n be r e g a r d e d o n l y a s a rough f i r s t gu ide t o s e e whet.her t h e p r o d u c t i o n c o s t would b e comparable w i t h t h e p r t c e of i m p o r t s . The accuracy of t h e e s t i m a t e is l i m i t e d on 2 c o u n t s . I n t h e f i r s t p l a c e , t h e b a s i c d a t a a r e t a k e n from p r o j - ects with a large v a r i e t y of s i z e s , c o n f i g u r a t i o n s and l o c a t i o n s . I n t h e second , t h e d a t a is taken from t h e s e s p e c i f i c p l a n t s and t h e n " g e n e r a l i z e d " t o make i t f i t to a h y p o t h e t i c a l g e n e r a l p l a n t . (Data were no t a v a i l a b l e f o r c e l l u l o s i c p l a n t s s o t h a t t h e y a r e not incl.uded i n t h e d i s c u s s i o n . ) De- t a i l e d estimates were made of t h e c o s t of producing ny lon , p o l y e s t e r and a c r y l i c f i b e r s i n I r a n . I n each c a s e , a p l a n t of 8 ,000 t o n s l y r . is c o n s i d e r - ed t o be just ahout the "median" economic s i z e . (See Annex 4 )

4 , 9 In the calculntio~ls t h e c s p i t a l c h a r g e s and u n i t l a b o r c l larges were taken t:o r e f l e c t a c t u a l I r a n i a n cor ld : i t io t~s ; t h u s r e t u r n on e q u i t y bras f i g u r e d a t !i0? heefore taxes; i n t e r e s t ; ~ t 1 0 % / y r . and d e p r e c i a t i o n a t 10Zdlyr. , -. -

whf le a n a v e r a g e c o s t of l a b o r f o r t h i s type of p l a n t was t a k c n a s R1 50O/man day . The other costs e l e n ~ e n t s a r c more u n j v e r s a l . 'I'llus r a w m a t e r i a l s were tnkcn a t i n t : e r n a t i o n a l c . i. f . p r i c e s , (no d u t y was f . igured on raw m a t e r i a l s ) , n t h e r materl.als as a. percentage of t ? ! ~ raw mnteri.;~ls ancl ~ ~ t i l i t i e s ant! :id-- m i n i s t r a t i o n c o s t s a s a percentngr-! of t o t a l mariufac t u r i n g c o s t s .

4 . 1 0 ?'tie e x e r c i s e gave t h e fo l lowl .ng t o t n l ex-plant c o s t f o r eacli f i b e r ~ ~ ! ~ i c h is coc!pared w!,~h c. i - f . n r i r r ~ e gf i r l ~ n n r t r

I*- ----' " " t ' - - -- '

' I 1 SYN'!'IIl:'l'TC: FIB!{I<l; PKODUC'J'TOPJ COST V s IFlI'OI<T PRICI;

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Pnl v ~ c t ~ r - - J -----

P r n d ~ ~ r t inn C n s t - - .. - - - - - . - - - - - c,i,f. Price

! ! 2-247 filament

4 - 1 1 T!!e enly ce~clusian tha t s!?e~1:! he d r a h ~ i f f r ~ m the c ~ r n p a r i s ~ i ; , 13 t h a t i t a p p e a r s l i k e l y t h a t an I r a n i a n nylon o r a c r y l i c f i b e r p l a n t w i t h a c a p a c i t y =f . > V B L ~ L - . A - ~ V , 52 nfln w v w tnnc C V A . ~ ) , l7.r J L . r . .n l l l , l WVUIU be compet ic ic re with impcrts The case of a p o l y e s t e r p l a n t is not a s c l e a r a s i ts compet i t i .veness depends h e a v i l y aps t-1,0 v o l . , ~ ..,-,-...,.~t4n.. ,.t-,. . . . I n - . - . I f 4 1"-.-...t +I . . .+ 4 + ,.-..1,4 -.--,I..-- -..- & C--CcxLAv = p a . w p v L LIITLI ,I*. U L C ~ ~ I L Z : ULLU I J . A ~ I I ~ G I ~ L L L L ~ L L C LVUAU Y L UUULC. A; I r a n ' s expected 1975 denland, tile r a t i o of s t a p l e t o f i l a m e n t would be 2 t o 1 which would g i v e an axvrerage c. i. f . n r 4 L r L I L L r n U C ? t t n A ~ y LVUU t ~ a l ~ e s =f 8 9 k l l b . If t h e p o l y e s t e r p l a n t could produce t h i s b lend f o r t h e 6 0 k l l b . i n d i c a t e d above i t t a ~ m i g h t be c ~ r n p e t i t i ~ ~ e .

K?ai i i rement of Man~owsr and C a ~ i t a l

I. 1 7 .1. I L

'F,. -....-- +I.- we.... a....... ,... +.. -&= ".....---.-- - - A - - - 2 - - - - --- -L-& ---- L U );ausc L I I C ~ C ~ U A L C I I I C I I L ~ U A L I I U I L ~ J U W C L ~ L I U I - P ~ I L ? L , a u p p u s c L I I ~ L LWU

p l a n t s each f o r nylon and p o l y e s t e r f i b e r s and one f o r a c r y l i c f i b e r s a r e I... "ullt < 1 by '"7C -,,, zs sugges;eb on - e n . . '>7

[ J a g C L I . 1. * 3 Lt. I _ ) (ITi t h i s basis, one coii:(j t i i a i some 3,5== s k i l l e & tecii- n i c i a n s and managers would be r e q u i r e d . A s up t o 5 p l a n t s cou ld b e i n v o l v e d ,

as each 7 -1 1n '.. - - - - -1. CUULU L ~ ~ I I L L ~ 10 g r a u u a ~ e s s u c r ~ as e n g i n e e r s , c h e m i s t s ,

b u s i n e s s a c l m i n i s t r a t o r s , e t c . , a t o t a l of 50 g r a d u a t e s would be n e c e s s a r y .

4.14 A c a p i t a l inves tment of some $70-90 m i l l i o n would be needed over t h e n e x t 5 y e a r s of which $50-65 m i i i i o ~ l would be needed i n f o r e i g n excnange, seven know-how a r rangements , p o s s i b l y i n v o l v i n g inves tment by t h e know-how s u p p i i e r wouid have t o be made.

4. i 5 .- w h i i e t h e c a p i t a i r e q u i r e m e n t s wouiti probab ly n o t c r e a t e undue

s t r a i n on I r a n i a n s o u r c e s of i n d u s t r i a l and f o r e i g n exchange f i n a n c e , t h e same cannot be s a i d of t h e demand on I r a n ' s t r a i n e d manpower b e c a u s e of the s h o r t a g e of s k i l l e d manpower i n g e n e r a l i n I r a n . However, g e n e r a l chemica l o r pet roleum e x p e r i e n c e can be a p p l i e d t o t h e " f r o n t end" of a Mt4F p l a n t , nntl f:cncr:~.l. t e x t i l e e x p e r i e n c e t o t:lle "back end", and t h e r e is a l a b o r poo l a v ; t i l n l ) l c i n I r a n to s u p p l y l>oth t h a s c two skills. I t w i l l be n e c e s s a r y t o clcvc:lt)p Ll lc , s1;iI ls of c o o r t l i ~ ~ n t l n g t l ~ e t w o "ends" of tlie PtMF p l a n t s o t h a t I t wil 1 rur l w e l l and olokt: i l good q u a l i t y ~ , r o t l u c t .

4.16 Another s p e c i a l i z e d s k i l l p e c u l i a r t o PlMF p l a n t s n o t r e a d i l y a v a i l - a b l e i n I r a n is t e c h n i c a l s a l e s s e r v i c e which is t h e key t o s u c c e s s f u l BMF marke t ing . High ly s k i l l e d p e r s o n n e l from t h e producing companies a r e t h e v i t a l l i n k t h a t e n s u r e s t h a t MMF's a r e a p p l i e d p r o p e r l y and e f f i c i e n t l y by t h e u s e r s i n a l l developed MMF marke t s . Th i s s e r v i c e is p r e s e n t l y a v a i l a b l e in Iran, being s u p p l i e d by p e r s o n n e l of XMF impor t ing companies who a r e , how- e v e r , mos t ly e x p a t r i a t e s . S u i t a b l e l o c a l peop le would need t o b e t r a i n e d t o r e p l a c e t h e e x p a t r i a t e s who would e v e n t u a l l y l e a v e i f i m p o r t s were r e p l a c e d by l o c a l p roduc t ion .

Timine. of MMF' P l a n t . Inves tments

4.17 W'ith I r a n a lmos t comple te ly dependent on i m p o r t s f o r i.ts p r e s e n t s u p p l y of MMF, one of t h e rnost c r u c i a l e1.emeor.s i n t h e t.i.ming of local. pro- d u c t i o n is t h e s t a t e of t h e i n t t r n : l t i o n n l mnrkct: for ?*IF. I f Iran's protluc- t i o n were t o come i n a t a t ime o f low world p r i c e s , the a d v a n t a g e s of l o c a l p r o d u c t i o n woultl bc s e v e r e l y cur ta- i lcxl . B y t h e same toke11 i f Local protluc- t i o n was n o t a v a i l a b l e , and h i g i ~ . i .n tcrnnt ional . p r i c e s p r e v a i l ~ x i , I r a n would have t o pay h e a v i l y t o s u s t a i n s u p p l i c s of MMF.

4.18 U n f o r t u n a t e l y - i n t h e i n t e r e s t s of s e r i o u s p lann ing - t h e world market f o r 'WF seems t o be e n t e r i n g a pe r iod of f l u x w i t h t h e outcome uncer- t a i n b o t h as to d i r e c t i o n and t iming . A f t e r y e a r s o f f a l l i n g p r i c e s , manu- f a c t u r e r s - p a r t i c u . l a r l y i n Europe - have r e c e n t l y t r i e d t o hold and even i n c r e a s e p r i c e s . However, a t t l ~ e same t ime , t h e g e n e r a l turnclown i n t h e econorny of t h e deve.loped n a t i o n s ( l e a d by the U . S . ) has weakened demand f o r t e x t i l e s and w i t h i t t h e demand f o r ?lMF. J a p a n llas been e s p e c i a l l y s e v e r e l y h i t p a r t i c u l a r l y i n i ts e x p o r t s , a blow mndc more s e v e r e by t h e t r a d e d i s - p u t e w i t h t h e U , S , over textiles,

4 ,19 The effect has hecn for p r i c e s to start down again, (Branded polyester s t a p l e i n t h e U.S. is a p p a r e n t l y s e l l i n g as low as 38d/l .b. - an a l l t i m e low). T h i s h a s been encouraged i n p a r t by a s i m u l t a n e o u s weakening of p r i c e s of petrochem:Lcal p r e c u r s o r s , p a r t i c u l a r l y a r o m a t i c s f o r which hugh ex- cesses of capacity have been i n s t a l l e d i n reccllt y e a r s .

4 ,20 Just how far prices will be a b l c t o drop and what t h e long term o u t l o o k w i l l be is u n c e r t a i n . H i s t o r i c a l l y i t h a s been s e e n t h a t MMF and petroc:hemici?l price!? rarely allatair! an increase once they start t o fall. On t h e o t h e r hand, one wonders how f a r chemica l companies can be s t r e t c h e d . Recenl: evidence .sh~r~s t!lat tl~ey are experi~_nring grave d i f f icult ies , T l ~ e r a s h of r e c e n t mergers i n Europe is a symptom of tlle problems they f a c e and last yezr'c: ~perrt ir lg rp__sults mUst h w ~ been very di_sc~~raging for the man- --- - agements. :If any s e r i o u s c u t b a c k s i n p l a n t inves tment occur - and t h e r e is an 0 1 1 4 d ~ n r e t h a t it mig!!t_ - demand cnllld cat_& !In I.,+ t11 =tipply ~ ~ ~ ~ ~ p ~ ~ t ~ d l v -*. --..--..-- -..-- -r ----- and send p r i c e s up.

4.21 The s e r i o u s n e s s of t h e p r e s e n t s i t u a t i o n ant1 i ts p o r t e n t s f o r t h e future cax be judge:!, fer -,x;lmplc, by t ! ~ c big s t a f f 1 3 ~ - 0 f f s i n the U.S. ( C e l a n e s e a l o n e w i l l l a y o f f 2,000 p e o p l e ) , and by v o l u n t a r y r e s t r i c t i o n s

ifi p r o d u c t i a f i f?y Ja;,;iflese syfic!;ctj.c f iber ::?;.,!<ers - particulnr-y p o l y e s t e r . I C I ' I; i n v e s tment cuth;~clcs have been w e l l p u b l i ciseci . 4 . 2 2 Tllis p r o b a l ~ l y means t h a t , f o r :i c o u n t r y l i lce I r a n , there is no need

1 I i t C h I c 4 : It S!:=iild cjf tiie prc- L U Y l l ULbL.,*.,l..l U L J l l U L yL V U U C l L l f i i l l 8 ,

s e n t weak s t a t e of tlie i n t e r n a t i o n a l marke t , en:joy t h e low p r i c e s of impor t s afid time t= prepare ;: cle,?r ;;xi! c=fi;pre!;ensive fir;:iofir;l plan f o r i i i ip le - ~ne i l t ing l o c a l MMF protluctiorl . Such p lann ing would seem even more i m p e r a t i v e

1 4 , . l . + e l . A ,...,.,.rt..-4T. ,.& +-LA F . . + - . . , , . . r n r l . l m , r l , . - . ~ n I + --.. 1 - 1 . ; A t l l t j , t L u L L ' l C I u k L L L C a A I t 3 L a C c CcaL: L u L u L r w u L I t ~ 141(11 K C L J . I.L CUULU n l . 8 ~ ) h e l p speed up p r o j c c t implcrnentatioii.

4.23 I f n a t i o n a l p1ann. i .n~ were cldvanccrtl eriougl~ s o t h a t b o t h i n v e s t o r s co.u:i; readi:.ji its bei ief i t s , a projec^L co."ld pr"ba;iy

be pu t toge t l l e r and f inanced wi t l i in 6-12 months. I f n a t i o n a l p l a n n i n g were -8-.. 77 - II,UL v e ~ y cleiir i t could t a k e a l o t longer ~ i i d i i~eii l e a d t o iioiiiiiig. r u r example, tlie a b o r t i v e l lo t rc l~s t p o l y e s t e r p r o j e c t took over a y e a r t o p u t to - gF the r . (it wouiJ proba;iy t-& 2-3 years t" construct a $EF piant in Iran and b r i n g it- t o f u l l c a p a c i t y once a p r o j e c t had been o r g a n i z e d and f i - rianeed . j T _ - - - - L > _-..I L ~ I V ~ S L . L ~ ; ~ L L ~ J I ~ S of WfF F i b e r P r o j e c t s i i i Iran -

4.24 r" 1 ~ n e r e has been a con t inu i i ig i n t e r e s t i n i v 3 i i : f i b e r p r o j e c t s i n I r a n s t a r t i n g i n t h e mid 60 ' s w i t h i n v i ? s t i g a t i o ~ ~ s of c e l l u l o s i c p l a n t s and cou- t i n u i n g t o rile p r e s e n t when a number of syrliriieiic f i b e r p r o j e c t s a r e be ing p9rsued. Tlie e a r l i e s t c e l l u l o s i c p r o j e c t p r o p o s a l s d i d no t come t o f r u i t i o n , mos t iy because t h e c o s t of p r o d u c t i o n was shown t o b e t o o n igh and because of a l a c k of l o c a l raw n l a t e r i a l s . Tlie o n l y s y n t h e t i c f i b e r p r o j e c t which was r e a i i z e d is che ~ i i a f nyiorl p i a n t . Zurrtil.lt FPiF p r o j e c t i n v e s t i g a t i o n s b e i n g pyrsued i n l r a n i n c l u d e t h e t o l l o w i n g :

4 $ 2 5 The Hoechst . p o l y e s t e r - f i b e r projec t w a s r e c e n t l y r e j e c t e d by t h e M i n i s t r y of Economy rnostiy because i t r e q u i r e d e x c e p t i o n a i i y h i g h (more t h a n 50%) pro tec t : ion i n o r d e r t o produce a t a p r o f i t . The p r o d u c t i o n c o s t s were e x c e s s i v e as t h e proposed c a p a c i t y of 3,500 t o n s j y r was too iow.

4.26 Otlier p o i y e s t e r p r o j e c t s - she lved d u r i n g t h e Hoechst i n v e s t i g a - t i o n - have a g a i n become a c t i v e . T M D I 3 I a n d I C I a r e bo th making d e t a i l e d i n - v e s t i g a t i o n s . ICI is i n v e s t i g a t i n g i1 p l a n t of 10,000 t o n s / y r c a p a c i t y t o be b u i l t I n s t a g e s a s e x p o r t nmrlcets can be developetl . These i n v e s t i g a r i o n s m e r i t s e r i o u s c o n s i d e r a t i o n , bu t shou.lci atrnl t t h e proposed market s t u d y be- f o r e t h e p l a n t s i z e and phasing of exparlsion is s e l e c t e d .

4 .27 The expansion of nylon c a p a c i t y is be ing pursued on t h e one hand by A l i a f , th rough a n i n c r e a s e of i ts c a p a c i t y from 3,000 t o 6,000 t o n s p e r y e a r (IFC f i n a n c i n g of t h i s p r o j e c t has r e c e n t l y been approved by IFC's Board of D i r e c t o r s ) and on t h e o t h e r hand by I C U and IEPdBI eacii e x p l o r i n g t h e p o s s i b l i t y of e s t a b l i s h i n g a second nylon p l a n t . The r a t i o n a l e f o r t h e l a t t e r i n v e s t i ; ; a t i o n s is t o introducrx a n c l c n ~ e n t of cornpet i t i v e n e s s i n tlils f i e l d and t o i u t r o d u c c t h e p r o t i ~ i c t i o n of ti.rt! c o r J . Apparen t ly an o f f e r has been rccci\.eti from one of t l ~ c E a s t e r n European c o u n t r i e s f o r sucli a p l a n t .

I t is not s u r e how s e r i o u s t he proposals a r e f o r s e t t i n t : up a second producer, but i t woulcl seem more a p p r o p r i a t e , Erorn I r a n ' s po in t of view, t h a t the e x i s t i n g producer would be made more i n t e r n a t i o n a l l y comperitive be fo re a second p l a n t i s mooted. I n t h i s r e s p e c t , Al ia f should be encouraged ILO

expand i ts product ion t o t h e 10,000 tons per year l e v e l s for which i t is l i censed a s it wou1.d be more l i k e l y to be c:ompetitive than a t the 6,000 t o n s l y r . l e v e l proposed i n i t s presen t p lans .

4.28 Two a c r y l i c f i b e r p r o j e c t i nves t l ga t ions are under way. ICl l -is propalsing a p l a n t wi th an annual capac i ty of 3,200 tons of t ops , 700 t o r ~ s oE s t a p l e , and 600 tons of tow. IMIII3I a l s o has a p r o j e c t h u t for a m u c h lztrger p lan t wi th an annual capac i ty of some 8-10,000 tons s p l i t roughly i n ha1.f between s t a p l e and tow. F l i t s u l ~ i s t ~ i is a s s i s t i n g I M I I R I i n t h i s project ancl t ~ s s of fe red t o expor t some 3,000 tons of product . A s I r a n ' s demand [night not consume t he full capac i ty of this plant u n t i l afrcr 1975 the of f ~ r to erport is a t t r a c t i v e .

' rechnology and P l a n t Locn t i o n

5.1 'The chemicill p r o c e s s r o u t e s by which c rude o i l and n a t u r a l g a s a r e L. ~ r a r l s i v r m e d i n t o sy r l t i i e t i c f i b e r s a re siiown d i a g r a m a t i c a i i y i n F i g u r e 2 . '[he p r o c e s s e s shown a r e t h o s e c u r r e n t l y be ing used f o r new p l a n t s producing ny lon , p o l y e s t e r , and a c r y l i c f i b e r s . i i the r p r o c e s s e s c u r r e n t l y i n o p e r a ~ i o n a r e economical because of t h c c i r c u m s t a ~ l c e s of t h e companies u s i n g them. However

I I i n a g r a s s r o o t s " s i t u a t i o n , such as e x i s i s i n I r a n , t h e scheme i n d i c a ~ e d i n t h e diagram would probably r e p r e s e n t t h e b e s t economic combinat ion of c u r r e n t - l y a v a i l a b l e and proven p r o c e s s e s .

5.2 The t h r e e b a s i c u n i r s i n tile scheme a r e tile a r o m a t i c s piant, t i le o l e f i n s p l a n t , and t l ~ e anlmon,ia p l a n t , and i d e a l l y they shou ld b e l o c a t e d c i o s e t o tile s o u r c e of t h e raw m a t e r i a l s - naphtha and n a t u r a i g a s - f o r t h e g r e a t e s t compara t ive advan tage . I t is a l s o advar~tageor ls t o u s e the naphtlia c i o s e t o an e x i s t i n g r e f i n e r y s o t h a t by-products wiiich wouid o n i y i a t e r be upgraded t o p e t r o c h e m i c a l s can be sell(: t)ac.ic t o t h e r e f i n e r y a s fuel proclucts There i s aiso u s e f u l i n t e r c i ~ a n g e of by-lxrotiucts and i n t e r m e d i a t e p r o d u c t s between t h e o l e f i t ~ s p l a n t and tile a r o ~ r ~ a t i c s p l a n t and i t is b e s t t o have t h e two u n i t s s i d e by s i d e o r at: least wj t l i i l i ~)i l ,ei . i r le d i s t a n c e of one a n o t h e r .

5.3 The b a s i c p e t r o c h e m i c a l s c o m i ~ i ~ from t h e s e p l a n t s , benzene, x y l e n e s , e t h y l e n e , p ropy lene , and ammonia, a r e a i l low v a l u e p r o d u c t s r a n g i n g from abou t $35 p e r ton f o r ammonia t o about $13 per ton t o r p ropy lene and are t h e r e f o r e not a b l e t o s t a n d liigli t r a n s p o r t c o s t s . I n a d d i t i o n , benzene and x y l e n e s a r e flammable l i q u i d s and tile o t l ier t l i r ee p r o d u c t s a r e g a s e s a t normal t e m p e r a t u r e s and p r e s s u r e s , s o t l i a t t h e i r t r a n s p o r t is p h y s i c a l l y d i f f i - c u l t ancl dangerous . It Is t l i e r e f o r e b e t t e r t o l o c a t e t h e nex t t r a n s f o r m a t i o n p l a n t s (on t h e r o u t e t o producing t l ~ e raw--materl .als f o r s y n t h e t i c f i b e r s ) c l o s e t o t h e b a s i c p l a n t s .

5.4 T h i s y i e l d s cyclohe:tane, p a r a x y l e n c and e t h y l e n e o x i d e which cou ld be regarded a s i n t e r m e d i a t e pet rocher : l ica ls . Tllese too s u f f e r from tl ie same t r a n s p o r t d . i sadvantages a s t h e b a s i c pe t roche ln ica l s , be ing of r e l a t i v e l y low v a l u e ($88-$175 per ton) and be ing d i f f i c u l t and dangerous t o t r a n s p o r t . I t is t h e r e f o r e b e s t t o transl 'orm them too I n p l a n t s l o c a t e d c l o s e t o t h e b a s i c p e t r o c h e m i c a l p l a n t s .

5.5 The f i n a l s t e p of t r a n s f o r m a t i o n , l ~ e f o r e go ing t o t h e f i b e r s , pro- duces t h e s o - c a l l e d f i b e r p r e c u r s o r s - capro lnc tam f o r ny lon , LlMT and e thy- l e n e g l y c o l f o r p o l y e s t e r s , and a c r y l o n i t r i l e f o r a c r y l i c f i b e r s . T h e i r p r o d u c t i o n r e q u i r e s a s e r i e s of d i f f i c u l t and c o s t l y chemica l r e a c t i o n s s o t h a t they have r e l a t i v e l y h igh v a l u e s r a n g i n g from abou t $287 pe r t o n f o r a c r y l o n i t r i l e nnd DPIT t o about $440 per ton f o r capro lac tam. ( E t h y l e n e g l y c o l is wort11 abou t $240 per t o n . ) A l l of t l icse p r o d u c t s a r e s a f e l y han- d l e d a t normal t empera tu res and p r e s s u r e s - a c r y l o n i t r i l e is however t o x i c .

They t h e r e f o r e can be e a s i l y packaged i n normal c o n t n i n e r s and sl i ipped v i a Lnal tiley 30 no t r e q u i r c normai t r a n s p o r t a t i o n means. Tiiis is riot to say " ' - '

s p e c i a l h a n d l i n g , f o r i n s t a n c e , t o p reven t e x c c s s ivc mois t u r c i n g r e s s t:o -. c.aproi.ac t a m . ~ n e p r e c u r s o r s can t i l e r e f o r e s t a n d r e a s o n a b i y 11i::'n t r a n s p o r t c h a r g e s b e f o r e i n c u r r i n g an e x c e s s i v e c o s t p e n a l t y . For thi .s r e a s o n t h e r e is no compeiiinp, r e a s o n f o r t r y i n g t o i o c a t e a s y n t n e r i c f i b e r p l a n t niong s i d e a pe t rochemica l complex.

5 . G The above t l i s c u s s i o n has emphasized tlhat wlien p l a n n i n g a p c t r o - c i iemicai . i synthet ic f :Lber i n d u s t r y from s c r a t c h , the cconomica i iy b e s t c h o i c e would p robab ly b e t o l o c a t e t h e pe t rochemica l p l a n t s c l o s e t o one a n o t h e r . On t h e o t h e r hand, t h i s does no t mean t l lnt i t would be uneconomic t o l o c a t e t h e p l a n t s at: some d i s t a n c e from one a n o t h e r . I n f a c t , i n s p i t e of t h e d i f - f i c u l t i e s and c o s t s of t r a n s p o r t i n g b a s i c and i n t e r m e d i a t e p e t r o c h e m i c a l s , t h e r e are c o u n t l e s s examples when a l l of t l ~ e s e p r o d u c t s a r e t r a n s p o r t e d over a p p r e c i a b l e d i s t a n c e s .

P e t r o c h e m i c a l I n d u s t r y i n I r a n

5 .7 I r a n ' s p e t r o c h e m i c a l i n d u s t r y is o n l y now be ing developed ant1 hias few of t h e components of t h e above sclleme f o r producing s y n t h e t i c f i b e r s . Apar t from i n i t i a l p r o c e s s i n g of na , :ura l m: i ter in ls , t h e p r o d u c t i o n of ammonia and t h e A l i a f ny lon p l a n t , t h e r e s t of t h e scheme is m i s s i n g . Tlie m i s s i o n has n o t i n v e s t i g a t e d what c a p a c i t y p r e s e n t l y e x i s t s f o r p r o c e s s i n g c r u d e o i l and n a t u r a l g a s o r what commitments have been made f o r t h e i r o f f - t a k e , b u t i t is known, t h a t NPC is s t u d y i n g t h e whole q u e s t i o n of petrochern- i c a l f e e d - s t o c k s f r o m I r a n ' s r e s o u r c e s .

5.8 Crude o i l is r e f i n e d t o naphtha a t t h e Abadan R e f i n e r y . Coming from a n i n t e g r a t e d l a r g e r e f i n e r y l o c a t e d c l o s e t o t h e s o u r c e of t h e c r u d e o i l , t he naph tha shou ld be a v a i l a b l e a t low c o s t f o r p e t r o c h e m i c a l t r a n s - f o r m a t i o n . The r e f i n e r y would a l s o be a b l e t o a c c e p t by-products from thtr naph tha t r a n s f o r m a t i o n s t e p s .

5.9 N a t u r a l g a s is a v a i l a b l e i.n two forms. The f i r s t i s t h e "wet" g:as s e p a r a t ' e d from c r u d e o i l . T h i s is processet l a t N T O C ' s Bandar Mashar plant: t o l i q u i f i e d pe t ro leum g a s (LPG), t l le l i g h t e r components b e i n g f l a r e d . It: is p r e c i s e l y t h e s e co~nponents t h a t a r e v a l u a h l e f o r producing e t h y l e n e ancl p ropy lene and , be ing f l a r e d , shou ld be n v i l i l a b l c a t low c o s t s . N a t u r a l g a s of t h e "d ry and sour" v a r i e t y is used a t NPC's Bandar Sliapur - I / p l a n t f o r f e r t i l i z e r s t o produc~tl nn1rnoni.n. P a r t of t h e nmrnorlia cou ld he usecl f o r produc ing s y n t h e t i c f i.be:rs i f t h e n e c e s s a r y capac:i. t y were a v a i l a b l e . Sour g a s is a l s o used a t Kharg I s l a n d - 2 1 t o produce s u l f u r and l i q u i f i e i l n a t u r a l gas (LNG) .

11 Shnpur !:!>emical Company ic 2 fertilizer producer with c a p a c i t y f o r - 1,000 t o n s p e r day ammonia, 500 t o n s p e r day u r e a , 300 t o n s p e r day

M-AJ', 13(! t-~c pe!: d a y TSP, 2nd 1 ,500 tens nnr y - L da\r , c t r l U U A y . . - L . n l ~ c n r

2/ Kharg Chemical Company h a s a c a p a c i t y of 200,000 t o n s of s u l p h u r and - 2 m i l l i o n b a r r e l s p e r y e a r of LNG.

5.10 The ot l ier i m p o r t a n t petroc:liernical p l a n t is t h a t of t h e Abadan Pe- t roc t i emica l Company, w i t h a c a p a c i t y For 20,000 tons PVC and 10,000 t o n s dodecylbenzene. T h i s i s produced frorn r e f i n e r y g a s from t h e a d j a c e n t Abadan r e f i n e r y , l o c a l l y produced s a l t , and imported bcnzene. T h i s company h a s been i n commercial o p e r a t i o n s i n c e J u l y , 1969. There i s a l s o a n o t h e r f e r t i l i z e r p l a n t a t S h i r a z based on n a t u r a l g a s and producing u r e a and ammonium n i t r a t e .

Minimum Economic S i z e of Pe t rochemica l P l a n t s

5.1 1 While t h e r e a r e no hard and f a s t r u l e s a s t o t h e minimum economic s i z e of p e t r o c h e m i c a l p l a n t s , t h e f o l l o w i n g t a b l e shows what is g e n e r a l l y r e - garded a s t h e lowest c a p a c i t y below w l ~ i c h a p l a n t would no t b e a b l e t o com- p e t e i n t h e world market - a l l o t h e r f a c t o r s of p r o d u c t i o n b e i n g t h e same. It a l s o shows t h e s i z e of p l a n t s t h a t have r e c e n t l y been c o n s t r u c t e d .

T a b l e 5.1: ECONOMIC SIZES OF PETROCHEMICAL PLANTS ( '000 t ~ n s / ~ r )

Nylon Protluc t i o n

Nylon f i b e r P e l y c a p r o l s c t a m Capro lac tam Cycln!?exane Benzene

P o l y e s t e r P roduc t i o n

P o l y e s t e r f i b e r D-1 ..n,. t n v -1.4 - 0 I " l y G i 3 C G L C I ' L y a

UPIT n... -,..--- 1 -A,. I, a L a n y l C L l C

E t h y l e n e g l y c o l F - L - - l ---: .I.-. C L L I Y I t Z L L C UAl<LtZ

E t h y l e n e

A c r y l i c P roduc t i o n

A c r y l i c f i b e r P o i y a c r y i o n i t r i i e A c r y l o n i t r i l e - r r o p y i e n e Ammonia

Minimum Economic S i z e

Recen t ly B u i l t S i z e s

5.12 It is s e e n t h a t petrocIiemica1 p l a n t s have t o b e l a r g e i n o r d e r t o compete, and t h a t even t h e minimurn economic s i z e p i a n t s a r e c o n s i d e r a b l y s m a l l e r t h a n t h e p l a n t s which have been b u i l t r e c e n t l y . The t a b l e a l s o il- l u s t r a t e s t h e f a c t t l ~ a t t h e millimuiii economic s i z e i n c r e a s e s r a p i d i y a s one

n m n o ..nc++n-r- Frnm n . - \ n c r . m n r r r n n r t o t= bas i c rat; mat-rials, This ixpliss tlIat 5VLa UFO L L C . U L I I I L VUI L \ I I . U U L L L L . C t,VVUD

even i f demand is s u f f i c i e n t t o s u p p o r t a consumer goods p l a n t , i t might n o t h- A..CC4m.t , . -+ t- -..-+.,.-+ +Lfi -1 -..+ us ~ U L I A L A C L L I - LV J U ~ ~ V L c LIIS PI TLUL U W L p l a i I L .

5 .13 A - x - ? l x - - . - i - - -c .-I.,. .-.--I .-.. 1 ..--..--. - -c --..-,.-I 2 - - I - - * 1 , i t 1 1 IIIUILUL I.UII VL LIIC LY IJL(..CIA ~ I I U I I L I L UL ~ C L L VCIICIIIICCII ~ I I L C L I I I C U L ~ I ~ L C S

and p r e c u r s o r s r e q u i r e d t o p r o d l ~ c e one ton of d i f f e r e n t s y n t h e t i c f i b e r s :is --2 I.----- g l v e l l L I ~ I U W .

i3asic- 7 -. . , - ln te rmcc i i a te P r e c u r s o r 1' me]:-

Propy iene 1230 kg;. Ammonia. 715 kg.

A c r y i o n i r r i i e iicryiic: 1020 kg. 1000 kjr, .

Benzene: Cyc:lohexanc Caprolactam Nylon - i 3 i O kg,. 134.0 kg. i i O O icg. ~ ( J U U kt;. (ammonia 1790 kg . )

- P a r a z y l e n e 723 ICE. D!IT 1075 kg. I 'olyes lrer - E t h y l e n e E thy iene o x i d e E t l ~ y lenc 1 OOU kl: . 340 kg. 360 kg. g l y c o l 400 kg.

5.14 These are i n d i c a t i v e f i g u r e s , as r e q u i r e m e n t s of s p e c i f i c p r o c e s s e s could be d i f f e r e n t from t h o s e shown and coultl v a r y w i t h t h e p a r t i c u l a r d e s i g n of chemical p l a n t . The t a b l e shows on ly t11e c h i e f p r o d u c t s i n v o l v e d i11 t h e p r o d u c t i o n of t h e t h r e e f i b e r s . I t docs no t show, f o r instance, t h e co-pro- d u c t i o n of ammonium s u l f a t e w i t h c a p r o l a c t a m , o r t h e 11eccl f o r ~ n e t l l a n o l i n thc! p r o d u c t i o n of IIPIT. Z'lethanol is a l s o co-producctl w i t h p o l y e s t e r . From th - i s i n f o r m a t i o n the amount of each p e t r o c h e m i c a l rcqi l i re t l to produce enough syn- t h e t i c f i b e r t o meet I r a n ' s demand i n 1975 is sl~own i n tile f o l l o w i n g t a b l e . The denland f o r t h e p e t r o c h e m i c a l in t :ermcdintcs is then compared w i t h the ~ilin- imum economic s i z e of p l a n t f o r each p r o d u c ~ .

'L'able 5. 3 : Z U N I A N I)14:?.LUJI) FOR SY:I'I:IIE'Tl.C F I IiER I'RECURSOKS - 1975 --

I r a n i a n Tons/ ton I rnr l inn Min. Econ. dernand a s of

Chemical Produced - .- F i b e r

-.-- 1)ernarlcl 1975 P l a n t S i z e ~ ] ~ i n . s i z e ( ' 000 ton) ( ' 000 ton)

Nylo~i P roduc t ion

Nylon f i b e r Carpo lac t a m Cyclohexnnc Renzcnc ibnmonin

A c r y l i c P r o d u c t i o n -

A c r y l i c f i b e r s 1 7 .5 7 , 2 r r v l r l n i tri 1 o ..-.., ....-..A-L A&- ! a (12 7,? 40 Propy lene 1 .23 9 . 2 125 Amnrrln i a (1; 7 2 .-..-..--.--. 5 ; 4 --., 77n

P e l v e s t e r P r o d u c t i e n

Pe lyescc r f i b e r I 14 7 l)E,IT 1 .08 15 5 0 n,,.-".r~,l r r * n L a L ‘LAY A c L 1 Z 1 !! , 7 2 1 (! r;n

2 w

E t h y l e n e g l y c o l 0.40 6 50 L'#-L. , l r . ..,. -.,;,I,, I rLLLr L C , I t z VAIuL 0.36 <

J c n >w

Et11yle.ne 0 . 3 4 5 250

5.15 'The t.;ll,le stlo~.ts t h a t I r a n ' s r a the r modest demand f o r s y n t h e t i c f i - I. L , r l a .---. ..... ,,ial\c=, 1, -- i i iiiill b ~ l j i i:iai p! a i i i s f o r pet.roe!ieiiiic;i: inter i i iediates c~i i i t i b e j u s t i f l ed on l y f-or 1 o c a l f i her needs i r ~ t11r. n e a r l 'u t r~re and u n l e s s t h e r e a r e - - & I - - - --?I v c t l c , r i lu tlaes f o r iii;iiiy 0: itie above iiiteriiieiliiites. The n y i o i ~ route i s t h e o ~ i l y one where drrnr~nd is 1 ikely t o grow s ~ t f f l c : i e n t l y i n a r e a s o n a b l e tfrne t o jLlsi ify. t i l e f i r s t ...~. ~ w u upstre;im i . i - a n s f ~ r i i w i i o n s t ~ p s . R u t e v e n a t the expec t e d ny lon growth r a t e of 7 % t)eyontl 1975, capro lac tnm denlar~d would r e a c h j i j,000 t o n s o n l y h y i 9 i i 2 . (Cycio 'nt~i tane tienl;~nd i s a lready above minimum economic s i z e . )

5.16 Of c o u r s e , t h e b a s i c pet rocl iernicals f i n d o t h e r u se s b e s i d e s pro- c e s s i n g towards s y n t h e t i c E i b c r s , bu t i t is beyond t i le scope of c h i s r e p o r t t o examine o t h e r demands. tlowever, :(PC and t h e m i s s i o n f e e l t h a t I r a n i a n demand f o r a i l u s e s of b a s i c p e t r o c i ~ e r n i c a i s w i i i n o t be h igh enough i n a r e a s o n a b l e t ime t o j u s t i f y b u i l d i n g i n t e r m e t l i a t e p l a n t s of economic s i z e .

5.17 Thus it i s obvious t h a t i f I r a n wishes t o bu i ld up a petrochemical i n d u s t r y , it w i l l have t o look t o o the r markets t o consume t h e ou tput of reasonalble si-zed p l a n t s . I r a n is i n v e s t i g a t i n g a number of such p o s s i b i l f - t i e s wi th fo re ign corr~panies and f o r e i g n governments. On the one hand i t jls inves t iga t ing ; an o l e f i n s / a r o m a t i c s p r o j e c t w i r h F l i t s u i of J;N!!~" and an am-- moilia p l an t with I n d i a , and on the o the r i t suppor t s t h e development of j o i n t petrochemical p r o j e c t s w i th in the RCD a r e a , I . e . between Turkey, Pak i s t an and I r an . Eioth rou t e s a r e being c:xploretl on a project: by project: b a s i s and thi-s c a r r i e s t he tlnnger t h a t t h e needs of a p a r t i c u l a r p r o j e c t could jeopard ize the o v e r a l l development of t he subsec to r , ant1 i t would bt! more apprnpr i . a t e that I r a n [level-o!, an o v e r a l l s t r a t e g y f o r i t s petroche!!~ir:al i ndus t ry .

5.18 Moreover, whi le not d e t r a c t i n g from the va lue and importance of the present negotfations with individual forei~n compnnies, the mission f e e l s t h a t t h e p o s s i b i l i t i e s t h a t e x i s t i n the RCD d i s c u s s i o n s m e r i t more a n r + n l l a rnncS r l n r r r P i n r b t h ~ n p ~ e ~ ! ? t l y ~g gr~~~~ t ; r ) the^!. "-..&--" --..".....----&-.. - ...... 5 . 3 9 The m i s n i ~ ~ rhprefnre nrr>n-re<! t- - -. I ' '- * hr-ef s t ! ! d t r i n the fensU.i L W L 1 A < LC;* t . 7 of es tab l i s f i . lng an in tep ; ra ted pt?troct~emical and s y n r h e t j . c f i b e r fndus t r y with- i:: the RCT) group and t h f . ~ !s sun!marixed h~!ov. ,",?tho;;i.,h t he study fociiseil on the RCD a r e a , i t s m e t l ~ o d o l o ~ y nntl a r E u r n e n t a r e p : e n ~ r a l e n o ~ r ~ h t o I.,e np-- . . 1 4 - , 2 + A -+LA... --.-,.-..-...AS+.. y A L c r r r u U L I I C ~ U L L a l I t : , c l t I r I I L >

as . . - . I ' wc I 1 ..

, IT rm,,. ,.,, R,,,. ,,,. m . 7 ,. T .TT , ,-,> A * , , . r , , . r , . . , n , ~ , . . - . . * n . * V I . 1111'. . ~ I l ~ l l l 1 ~ L I L l ' L D l s . K IL\LJ l ~ l ~ l l ~ ~ J L t ~ 1 ' ~ l " l l L , f ~ l ~

6.1 One example of o t h e r lnarltets t h a t I r a n is e x p l o r i n g f o r petrocliem- i c a i s is i t s i'rCii ne i ) ;hbor s , Turkey and i'aicis t a n . T o g e t h e r tiicsc c o u n c r i e s have e s t a b l i s h e d a s e c r e t a r i a t Lo promote j o i n t deve lopmen t s i n t h e r e g i o n , and w i t i i i n tile l n d u s t r i a i S e c t o r iiave siri[:ied o u t i ' e t roc i i emica i s f o r p a r t i - c u l a r a t t e n t i o n . The p o s s i b i l l t ies o l j o i n t RCL) p c t r o c h e m i c n l development a r e examined i n t h i s s e c t i o n p a r c i c u i ; i r i y i l l a s f a r a s c h i s migilt make f e a - s i b l e t h e i n t e g r a t e d product i .on of syntl iet . ic : f i b e r raw m a t e r i a l s from c r u d e o i i and n a t u r n l g a s .

6 .2 7. The d i s c u s s i o n Ls Focused on t h e RCD a r e a f o r two r e a s o n s :

i . 't'liere is a l r e a d y a w e i i e s t n h i i s t l c t i p o l i t i c a l w i l i t o promote j o i n t dcvelopnient i n Lhe re) ; ion .

2 . Tllc I{anlc fins l)eco~r~c-: well. i~iformc4-l o f the p e t r o c h e m i c a l and s y n t h e t i c f i b e r industries i n t i le a r e a and s o tile t i i s c u s s i o n can be based on q r l a n t l i t a t i v e g r o u n d s .

However, i n s p i t e of i t s f o c u s , t h e mc t I~odo logy and argument of t h e d i s c u s - s i o n are g e n e r a l and can b e a p p l i e d t o o t h e r a r r a n g e m e n t s as w e l l .

bMF Supp ly - and and Pak j . s t an -- -

6.3 In 'Curkey, IFC h a s made t h r e e i n v e s t m e n t s i n t h e main p r o d u c e r o f n y l o n tex t i1 .e y a r n s and r e c e ~ i t l y i n v e s t i f : a t e d a p r o j e c t f o r t l ie p r o d u c t i o n of p o l y e s t e r s t a p l e . From t h e IFC p r o j e c t i n v e s t i g a t i o n r e p o r t s , i t a p p e a r s t h a t T u r k e y ' s s y n t h e t i c f i b e r i n t l u s t r y , which s t a r t e d i n 1968, i s u n d e r g o i n g o r g a n i z a t i o n a l changes and t h a t two tnajor and i n t e r n a t i o n a l l y c o m p e t i t i v e p r o d u c e r s w i l l emerge when t h e s e have been comple t ed . Both w i l l p roduce nylorl and p o l y e s t e r f i b e r s , w i t h t h e SXFAS Company d o m i n a t i n g t h e m a r k e t i n n y l o n , and [:lie SASA Company tionliriatint; i n p o l y e s t e r . I n a d d i t i o n t h e r e are two o t h e r smaller cornpc\uies, one p roduc ing i iylon y a r n and t h e o t h e r polyester y a r n . The IFC r e p o r t s a l s o men t ion t l ie e x p e c t a t i o n t h a t a n a c r y l i c s t a p l c p l a n t w i l l b e 111 p r o d u c t i o n by 1971.

6 . 4 Turlccy's denland f o r s y n t h e t i c f i b e r s has grown r a p i d l y and i n re- c e n t y e a r s h a s been rn:ltclied by e x p a n s i o n i n c a p a c i t y . Growth of b o t h demand and c a p a c i t y is e x p e c t e d t o c o n t i n u e i n t h e immedia te f u t u r e , as shown i n t h e f o l l o w i n g t a b l e .

T a b l e 6.1: DEMAND AND CAPACITY FOR SYNTHIXTIC F I R E R S IN TURKEY --- ( t o n s )

Year - - Nylon P o l y e s t e r - - A c r y l i c - D!?m.mand !:apacit,~ Demand Canari t v -- - &----J

Demand C2pnc:itv --L

19?0 7,300 12,100 !0,200 8,300

1973 15,800 16,800

1975 12,500 LL '17 ,V"V nnn

/ a Nylon and p o l y e s t e r p l a n t s were s t a r t e d up i n 1968 b u t t h e e f f e c t i v e ca-. - ..--a +.. ..-- *..-.-.. 1 A*. p a ~ ~ c y nrua V C L y L U W .

So iiif~riiiati~.ir is giij~ri iri the IFC r ? p o r t s on t ! i ~ celliilo~i~ f i b e r siiii~t!.ori i n Turkey, b u t from o t h e r s o u r c e s i t i s known t h a t a 8 ,200 t o n / y r rayon s t a p l e plant is L - . f - - - 1 I

I J ~ . L L I ~ ~ , ~ . d ~ r ~ l e u at ii ~i C C where rayon [Ilaiiieiit is prese i i t ly produced.

6.5 The MJtF s i t u a t i o n i n P a k i s t a n , was s u p p l i e d by PICIC i n r e p l y tco a q."estioiinaire by '1. - -.'--I -.

rlie I I I L S R I O I I . iiayon, n y l o n and po1jiestt.r f i b e r s a r e b e i n g used and p r o d u c t i o n of nylon and rayon commenced i n 1966.

6 .6 The rayon comes from f o u r s m a l l rayon p l a n t s w i t h a t o t a l of 3 ,150 -. t o n s pe r y e a r . l r i e re a r e two s m a l l rayon p l a n t s w i t h n t o t a l capacity of 6 ,400 t o n s / y r . Impor t s supplement t h i s p r o d u c t i o n and a l s o s u p p l y p o l y e s t . e r f i b e r .

6.7 ii r e c e n t s t u d y p repared by M r . T. V. Jannkievsk i i n August i 970 under a U N I D O p r o j e c t gives a f a i r p r e d i c t i o n of EWF f i b e r demand th rough 4 n - F

I Y I ~ b e i n g based on n d e t a i l e d examina t ion of P a k i s t a n ' s t e x t i i e i n d u s t r y . Even so , i ts e s t i m a t e s a r e o p t i m . i s t i c , p a r t i c u l a r l y r e g a r d i n g p o l y e s t e r f i - b e r , g iven tile p r e s e n t icvci. of s u p p i y of FiFiF. J a n a k i e v s i c i ' s demand e s t i - mate is shown below t o g e t h e r w i t h P a k i s t a n ' s p r e s e n t FPfF c; lpaci ty .

T a b l e 6.2: DEMAND ILUI) CAPACITY OF PEtI: IN PAKISTAN -- ( t o n s j

Year Rayon - - - iu'yion -- P o i y e s t c r ~ c r y i i c Dcmand Capacit;r Denland C a p a c i t y Demand Capac i ty Ilemand ~ a p a c i 5 -- - -- -- --

S v n t h c t i c F i l ~ c r s i l l t l ~ e RCI) (:oun t r ies

6.8 From t h e above d i s c u s s i o n , a113 Lakin); t l ~ c m i s s i o n ' s c o n s e r v a t i v e .. ̂C . I . . . ^ C ^ C-I 1 1 3 . - CZ.LIIIICLCT L U L " ~ : I I I . ~ L L U 1 1 1 I L C I I I , tlie foilowlii j ; t i i b i c cari be 111acie to sulnmarize t h e tle~:i;lrld e x p c t c t n t i c ~ ~ i s for s y n t h e t i.c f i b e l - s i n the 1tCD c o u n t r i e s .

1 3 SYIJ'I'HLTLC F I B E R I)L!lAI.JI) - lZCll - ( ' i;GO io11)

"roiyes t e r 1970 1375

I r a n 9 . 8 16.5 2.5 7.5 3.8 14.0

Turkey 7 . 3 12 .5 5.5 1 . 10.2 22.0

P a k i s t a n

T o t a l RC:D 20.1 37.0 8 .0 19.5 14.0 44.0

a / Es t ima ted a v a i l a b i l i t y of' c a p a c i t y - taltcn as e q u a l t o demand.

6.9 'l'ilis would i ~ i c i i c n t e a growth ra te of i 2.5% per y e a r f o r ny lon , 19.5% f o r a c r y l i c , and 22% f o r p o l y e s t e r , wllich - f o l l o w i n g t h e p r e v i o u s d i s c u s s i o n on growth r a t e s - would not be o u t of l i n e f o r t h i s a r e a and could p o s s i b l y be some~~liclt c o n s e r v a t i v e .

6.10 The c a p a c i t y of exist in^ RCD s y n t h e t i c f i b e r p l a n t s is known w i t h a good d e g r e e of accuracy . Howcvcr, c h i s is no t t r u e f o r f u t u r e c a p a c i t y , e x c e p t pe rhaps f o r t h e T u r k i s h expansion p l a n s . A number of o t h e r " s e r i o u s " p l a n s a r e known t o e x i s t , wliicll can be sununarized a s f o l l o w s : I / -

Nylon: E x p a n s i o n of I r a n i a n p l a n t by 7,000 t o n s l y r .

A c r y l i c : A nc?w Z r a ~ l i a n plcint of 8 ,000

P o l y e s t e r : A new I r a n i a n p l a n t of 8 ,000

A new P a k i s t a n p l a n t of 5,000

I / T h i s shows o n l y t h r e e a d d i t i o n a l p l a n t s i n I r a n n o t the f i v e c o n s i d e r e d - t o be p o s s i b l e on page 2 7 . T h u s i t r e f l e c t s t h e M i s s i o n ' s judgement of t h o s e p r o j e c t s l i k e l y t o b e a b l e t o m a t e r i a l i z e by 1975.

It is f e l t t h a t t h e s e plans could m a t e r i n l i z c by 1975, so t h a t presenL i<1:1)

s y n t h e t i c f l b e r c a p a c i t y and t h e l i l t e l y c a p a c i t y t o bc a v a i l a b l e then w o ~ ~ l d be a fnlln!.r:;

Table 6 - 4 : %!r!']lE'rT_C FIBE!! cAP,A.CITY - RC!) --- ( ' 000 ton)

Nylon !9?0 197.5

A c r y l i c - Poly e s :%

1 9 70 1975 ! 9?(! !??5

D-.1,4-+...- I U R I..> L . a L A

7 3 J . L

7 ') 2. .- < n -- -- - J ." ---

6.11 D.. -- -....- <- - + I . - D P ~ -..-- 1.- -..,I A -...-.... 1 - - + I - - . - - - -1.- c- i i - . .<- , . U) L V l l l l J t l L I . l L # L l lC L \ b I J 3Upt)ly r l l l C l U C l l l t L L I L l CrS L l l l l d L C a L L l r IUlAUWILI&;

c o n c l u s i o n s elnerge r e g a r d i n g tile o v e r a l l s y n t h e t i c £ i b e r s i t u a t i o n i n t h e a L ed .

a. A t tlie region is a net iiiiportcr of a l l 3 sjini--,etic

f i . b e r s , r e . q u i r i n g i n e x c e s s of 1,800 t o n s of n y l o n , 8,000 tons of acryl ic and 5 , i i i O t o n s a n t i u a l i y of p o l y e s t e r f i b e r from o u t s i d e s o u r c e s t o meet i t s nceds . ( I t is a l s o t r u e t h a t each of t h e 3 c o u n t r i e s is a n e t i m p o r t e r of t h e 3 f i b e r s - e.xcept f o r Turkey which h a s some s p a r e nylon ca- p a c i t y ) .

T t- b . L r no f u r t h e r expans ion inkcs p l a c e i i ~ e requ i rements f o r i m p o r t s w i l l , by 1375, i n c r e a s e subs t rnn t Jn l ly t o 17,301) t o n s of n y l o n , i9,500 tons of a c r y i i c and 35,700 t o n s of p o l y e s t e r fibers a n n u a l l y .

c . Even i f t h e " s e r i o u s " p l a n s f o r cxpnncling c a p a c i t y a r e p u t i n t o e f f e c t , rne need f o r impor t s i n i 975 wouid be i a r g e r t h a n i t is today namely, 9,000 t o n s n y l o n , 6,000 t o n s ac ry - i i c and i4 ,200 tons of p o i y e s t e r a n n u n i i y .

6 . i 2 - . L r is s i g n i f i c a n t t o p o i n t o u t the magni tude of t h e economic e f -

f e c t s of t h e l a s t c o n c l u s i o n . On t:he one i~an t l , i f t11i.s u n f i l l e t l demand was s u p p i i ~ e d i o c a i i y it couid be economica i iy protiuced i n 3 o r 4 new s y n t h e r j . ~ f i b e r p l a n t s , which would r e q u i r e a n inves tment of $40-60 m i l l i o n , could p r o v i d e employment t o some 2,5130 workers and which woulcl add some $20 m i l . - l i o n p e r y e a r of val ,ue t o t h e economy. On t h e o t h e r hand, i f t l ~ e u n f i l l e d demand were imported i t would c o s t t i le r e g i o n some $20-25 m i l l i o n p e r yea.r i n f o r e i g n exchange.

6.17 T h e s e facts i n d i c a t e the serio1jsncs.s of +kke ecen~mic e f fec t s -&efi t h e supply/demand Imbalance Is s e e n from a r e g i o n a l v iew r a t h e r t h a n from t!?e v i e t ~ p n i n t of each cnflntry* They s!lw t h a t nne can t h i n k ir: terms ef 3 o r 4 new e c o n o m i c a l l y s i z e d u n i t s when l o o k i n g a t t h e r e g i o n a l p i c t u r e , whereas IT? nnI?e of +he ~~cntr-e~ WQG~C! tl-ie u n f i l l e d demand justify a s i n g l e a d d i t i o n a l e c o n o m i c a l l y s i z e d u n i t .

Demand f o r S v n t h e t i c F i b e r I n t e r m e d i a t e s i n KCD

6.14 Based on t h e 1975 e s t i m a t e s f o r s y n t h e t i c f i b e r demand i n t h e RCD area, and the f zC to r s nrosrAnt011 n r ~ 1 r 4 n r 1 ~ 1 ~ 1 ~ \ a o n ? < tho F n l l n r . v 4 n r ~ +,Llr,

1.- ------- r- - - ----'- J , k r U h b 92, - . f i b L V I I V W I & ' 6 LQUaS

shows t h e amount of p e t r o c l i e m i c a l i n t e r m e d i a t e s needed t o p roduce t h e 1iCD s v n t h o t i r ..-..---- f i h o r -"-.. demand. The demand f e y t!:e pn,Lr=c!:emic,?ls is 3 1 s ~ given a p e r c e n t a g e of t h e o u t p u t of a mini~nuln s i z e p l a n t .

T a b l e 6.5: DEMAND FOR SYNTIIETIC FIBER INTERMEDIATES - IN RCD &YE), - 1975

( ' 000 ton )

Tons Demand Minimum Demand as % Chcmicfil en- C u l l g 4 h r . w L A U C Z C

---- . .den -- 1?75 -- C L U L L . 314C of =in. s i z e

X l - - l - - c21.-- lVyAUl1 L J . l J r L

C a p r o l a c tam r . - - - > -L ~y c lullendlle

Benzene 1~~ --.., -

iUNIlVIl id

2 . A c r y i i c p r o d u c t i o n

A c r y l i c f i b e r A c r y l o n i t r i l e P r o p y i e n e Ammonia

3. P o l y e s t e r p r o d u c t i o n

P o l y e s t e r f i b e r 1 .OO IIMT i .08 P a r a x y l e n e 0.72 E t h y l e n e g l y c o l 0.40 E t h y l e n e o x i d e 0.36 E t h y l e n e 0.34

The t a b l e sl-lows c l e a . r l y , t h e e f f e c t of r e g i o n a l economics, i n making i t easier '- LV j i l ~ t f f j i moderi-i plaiits of e~o3aiiii.r: s i z e . The table s:iows t \ iat t h e demand would b e s u f f i c i e n t t o j u s t i f y t h e Fol lowing p l a n t s :

- 5 Nylon f i b e r

- 3 A c r y l i c f i b e r

- 6 P o l y e s t e r f i b e r

- 1 Caprolactam

Ploreover, a t t h e expczcted growtll r a t e of t h e f i b e r s , i t would be p o s s i b l e t o j u s t i f y add1tFona.i p i a n t s wi t i l in a v e r y s n o r t t i m e a s f o i i o w s :

- i P a r a x y i e n e p i a n t i n 2 y e a r s

- i Ucnzene p l a n t i n 4 y c a r s

- 1 Acry1on i t : r i l e p l a n t i n 4 y e a r s

- 1 E t h y l e n e Oxide p l a n t i n 5 y c a r s

- 1 E t h y l e n e Glyco l p l a n t i n 5 y e a r s

I n o t h e r words, by 1980 t h e RCD demand f o r s y n t h e t i c f i b e r s and t h e i r pre-- c u r s o r s would j u s t i f y b u i l d i n g i n t e g r a t e d p r o d u c t i o n from naph tha and na- t u r a l g a s t o f i b e r excep t f o r e t h y l e n e , p ropy lcne and ammonia plants. (It: i s i n t e r e s t i n g t o n o t e t h a t i t would j u s t i f y a n a r o m a t i c s p l a n t .) However, i t is most l i k e l y t h a t t h e demand f o r t h e s e chemica l s ( e t h y l e ~ l e , p r o p y l e n e and c e r t a i n l y ammonia) for u s e s o t l l e r than s y n t h e t i c E i b e r s w1.11 b e s u f f i - . c i e n t t o j u s t i f y economical ly s i z e d p l a n t s .

6.15 The c l e a r c o n c l n s ~ o n of t h i s e x e r c i s e is t h a t t h e r e g i o n a l demand p r o v i d e s ample b a s i s f o r 1)nckward i n t e f l a t i o n from s y n t h e t i c f i b e r s t o pe- t r o c h e m i c a l s . T h i s is n o t t r u e f o r any of t h e t h r e e c o u n t r i e s i n t h e a r e a , i n d i v i d ~ l a l l y nnd i t seems cornpcll ing t o exn~rline t h e possibility of e s t a b - l i s h i n p , ;I j o i n t schernc i n t h i s i n d u s t r y s u b s e c t o r on a r c g i o l i a l b a s i s .

Hasls fo r 3 J o i n t ICCD Petrochemical /Synt t \c t ic F i b e r Scheme

6.16 The o b j e c t of t h e e x e r c i s e is t o clefine a r e g i o n a l scheme t h a t would arrnual ly producc: 36,000 t o n s o f nylon f i b e r , 20,000 t o n s of a c r y l i c f i b e r and 44,000 t o n s of polyester E i l ~ e r i n t h e RCL) a r e a by 1975 u s i n g raw m a t e r i a l s from t h c r e g i o n . For t h e scheme t o have a chance of b e i n g a c c e p t a b l e , a b a s i s must be found , and criteria e s t a b l i s h e d which would s h a r e t h e necc!ssary pl .ants among t h e 3 c o u n t r i e s t o g i v e e q u a l economic and s o c i a l benef i t s t o each. Among t h e most i m p o r t a n t b e n e f i t s t h a t a c o u n t r y r e c e i v e s from a new i n d u s t r i a l v e n t u r e a r e :

- 'Tho 0 ~ ~ 1 n.rmnn+ nn-nrrrt,r,l I... t l r r 2 ern l -,-I- L i l L UIIyIVJIIILIIL f iF - I IcLaLGI . L I J L L I L Y L V J C L L .

TI....- & I . - -4-La- 1.- -1..--,.A A 11113

Lllr IILUJcCLJ UC a L c u S O a-,. ... :.,.-. ̂..̂L. -c &I.- cL.,,- --..- &-4-.. LU I j A V t ; CULL1 U L L l lC LLLLGC C U U I I L L l C b

t h e same v a l u e s of t h e s e b e n e f i t s .

6 .17 The s h a r i n g would have t o t a k e accoun t of e x i s t i n g u n i t s , s o t h a t -- &-.- I--- & -

11" CUUILLLY ~ ~ i t s LU do away with prodiict ioi i that is already in haiid. (ifowever i n t h e c a s e of P a k i s t a n which h a s f o u r s m a l l ny lon p l a n t s , i t is s u g g e s t e d L L - - LIlaL -I- Lllrse _ _ _ aT,algaTllatcd aiid expanded i1ii-o 2 economic size t i n i t s . ) The

scheme wou:ld a l s o r e c o g n i z e t h e e n g i n e e r i n g r e a l i t i e s of s u c h a complex, s o t i l a t "oiat,iie and dangerous mIteria-is are to t i ie i r "5 pro-

d u c t i o n , r a t h e r than b e i n g t r a n s p o r t e d over long d i s t a n c e s t o be used.

6.18 Tlie scheme would make u s e of p l a n t s of minimum economic s i z e o r larger and r e c o g n i z e tile face t i l a t some of t i l c bas ic products "ill be used

i n o t h e r a r e a s b e s i d e s s y n t l i e t i c f i b e r s . Only t h a t p o r t i o n of t h e bene- f j . t s of p r o d u c t i o n of b a s i c p r o d u c t s tha t is rei.ated t o f i b e r s wouid be c r e d i t e d t o t h e c o u n t r y wi t l l in t h i s p a r t i c u l a r sclieme.

O u t l i n e of n J o i n t Scheme slid i ts B c n e f i t s

6.19 A f u l l d e s c r i p t i o n of t h e development of a j o i n t scheme is g i v e n i n Annex 5 which is summarized h e r e . As I r a n i s t h e o n i y c o u n t r y w i t h t h e n e c e s s a r y n a t u r a l r e s o u r c e s , i t f o l l o w s t h a t t h e b a s i c p e t r o c h e m i c a l u n i t s stlould be l o c a t e d t l i e rc ( P a k i s t a n ' s d r y n a t u r a l g a s is n o t s u i t a b i e f o r I ~ e t r o c h e r n i c a l s ) . Tlie inimetiiate downstream u n i t s a r e b e s t l o c a t e d i n t h e same complex a s t h e b a s i c p l a n t s , s o t l ia t I r a n would have all p e t r o c h e m i c a l p r o d u c t i o n u p t o t h e immediate f i b e r p r e c u r s o r s . The f j b e r p l a n t s must then b e shart.d .~rnnnj: t h e 3 c o u n t r i e s t o meet t h e c r i t e r i a e s t a b l i s h e d above.

6.70 It proved i m p o s s i b l e t o s h a r e t h e p l a n t s s o a s t o g i v e each coun- t r y an e x a c t l y e q u a l amount of t he f o u r economic and s o c i a l b e n e f i t s . A compromise lias t o bc made i n whicli, I r a n 11as a l l pe t rochemica l p r o d u c t i o n and 2 f i b e r p l a n t s , Turkey Iias 7 f ibc?r p l a n t s and P a k i s t a n 5 f i b e r p l a n t s . Tlie schemc is shown i n d e t a i l i n Tiible 0.7 . It g i v e s t h e f o l l o w i n g s h a r e of b e n e f i t s t o each corintry:

T a b l e 6.6: VALUE OF EC0l"JOMIC BEIGJ'I':FITS TO 1SAC11 COUNTRY - T o t a l C a p i t a l Employment Va lue B a l a n c e of I n t e r -

Count:= I n v e s t:ment -- Genc2rn t e d Added r e g i o n a l 'I'riide -- $ m i l - l i o n $ m i l l / y r $ m i l l l y r

I r a n 1 ;!2 2 ,652 48.7 ( 3 . 6 )

Turkey 109 4 ,600 40.5 (8.6)

T o t a l 309 1 0 , ?I,Q 126.3 0.0

6.21 b lh i le the s l l a r i n g of b e n e f i t s can I ~ a r d l y h c s a i d t o he exact ly equal . , t h e sum of b e n e f i t s t o each c o u n t r y is n o t o u t of l i n e . Thus i n spite of the fact dtat Pakistan appears t b g e t tllr l e a s t benefits i n te1-fn.s

of c a p i t a l and v a l u e added , i t a l o n e of t h c t h r e e c o u n t r i e s h a s a p o s i t j - v e ( i n f ac t very Inrge) value of i.n.~crregior!n!_ t rade ; Ry t!!e same token f!: may b e s a i d t h a t I r a n h a s t h e l e a s t number of nmJ jobs c r e a t e d .in t h i s s r h o m ~ 2nd c ~ ~ f f ~ r c f r n m n ~ c l a t i v ~ i n t o r y r > v i n n n l t r n d o . Rut on o t _ ? i ~ r - "- ---- --- - --I - - . - - r , - - - - - -P --.-- -. - hand i t r e c e i v e s t h e h i r , h e s t vnluc? addcd , t h e I i i g h e s t i n f u s i o n of new C:.I-

p i t z l , 2nd !xis the b o s h f e r !,uilc!ir?g up a p e t r ~ c ! ! e m i c a l i n d u s t r y . Tu rkey on t h e o t l l e r hand h a s t h e w o r s t s : i . t ua t ion rej:arcl.ing i n t e r r c g i o r ~ n l t r a d e , , but the hest regarding emplo jTent , w h i l e it dces very well wit!l regard

new c a p i t a l . i n f u s i o n and v a l u e nddc?d.

C o n c l u s i o n -- 6 .22 The e x e r c i s e ha:; c1cmonstrntet:l t h a t a b a s i s e x i s t s f o r a s h a r i n g of rhr. ,-.-.,-,A, L, , ,F4+, . + I . , + ..,..1,1 , , , . . I .- F",, L L L G CC.VLIVIIIIL UTILCI L L D L ~ L ~ L L WUULU I.CJUIL I .LVIII n regioiislly iiltcgratec! sj.rit!iil--

t i c f i b e r - p e t r o c h e m i c a l i n d u s t r y . The e x e r c i s e must be talcen on f a c e , , - . I . . , , YULUC; VLLIJ, ,-,,-,I.~ as the infcr~atic:: a:::! n s s u m p t i ~ n s up=:: which it is based a re of I t order: of magni tude" a c c u r a c y .

6 .23 klowever, i t shows t h a t i t is p o s s i b l e t o tlevclop n rnu tun l ly bc:ne- LICl<lL c ; - 2 - 1 aLLlc -..I lllr ijii a -,.-.'--,.I I.-- 2 - ..-.I.-- -'-.:--**..- - - . I --*; -.-- 1 - - 4 '--: -

L L:);AVI1UA I J < 1 5 J 3 11:31I1# I I I J J C I . L I V C n l l l l L d L L U l l r l L C L L L I . L . L d Gii-

Ly. To be r e a l l y p r a c t i c a l , such an c ? x c r c i s e worlld t a l x a c c o u n t of tllc: - - - - J C t - 2 - I . - - , . C 2 + - - e l . - r - ..-a I. --..,c,.. .. 1-1-.. . 1 ~ ~ C C I I LC: CLIJIIUIIIIL UQJLICL LL- L I I ~ L C..<LII C ~ I U L I L L y w I.DIIC.:II tii ~ t i - i ? ~ ~ , ~ i ; i i l < l be based on an a c c u r a t e l y dc t e rmincd tlemnnd e s tLmntc F o r a 1 1 p roc luc t s , ancl - ..- L " L- I ,C U L *.c ...--.. I t t u i , C 3 c 1 . V : ~ ~ ,..-.-.. =- wi;ti?c! ic!enl.?y !iiclu;!e rill of the procliicis arid i;roj-

ects , w i t h i n t l lc s c o p e of pe t rochem. lca1 devel.opmc?nt. T h i ~ s i t would go be- . I - - 1 ' - s y t i t c 1 1 . . ,'-'----- "- y u r r u I ~ . I J C L s ~ I L L ~ ~ L ~ ~ J L I C ~ , L U I J U ~ L , I I C L C L & C I I L ~ , E t C

T a b l e : - INTIERATED PETF~LCAL/SYNTHEl ' IC FIBER PFf0DUCT:IOPI IN THE IED Am54 ----

Plants Now --

N e w Plants --

T o t a l Ca?ital Employmemt Value Production Demand Ikports Value of -1-tz

P l a r l t ~ -- Infused Generated Added 1!?7j --- --- 1975 -- (:LlIrports 1 B m o n $;;zill/yr ---..-----------.--- 1000 t0n.s ---.- ----- Product --

Iran -- Ammonia ~ e n z e n d v p a r a x g l , m d ~ c l o h c c a n & ~ . o p y l e ~ ~ e k / Ac :xy lmi t r i l e DIr' Ca.prolal:tm Wlon Fiber ? o l y e s t ~ r Pib'er Xc:rylic Fiber

200 250 35(3 800 BOO

Tota l -

Caprolactan D1f.r Acrylonitri le! Nrlon Fibe r Polyes ter Fiber Acxylic Fiber

Tota l

Ci1prolactam m4r A~:zyloni t r i le Nylon Fiber Polyes ter Fitmr Acryllc F ibe r

To ta l

91 Par% of an arantaticl: comp:lex. 51 P a r t of an o l e f i n s comple:~.

6.24 The p lann ing of complex i n t e r r e l a t e d p r o d u c t i o n sys tems is common p r a c t i c e i n d i e l a r g e chemical companies. S o p h i s t i c a t e d mathemat ica l tech- n i q u e s a r e be ing developed f o r computer r o u t i n e s t h a t hand le models of i n - t e g r a t e d chemical complexes. An example of such p l a n n i n g t h a t r e c e n t l y came t o t h e Bank's a t t e n t i o n was t h e o p t i m i z i n g of an inves tment program t o produce t h r e e b a s i c i n o r g a n i c chemicals i n one of i ts member coun t r i c t s , based on cornputor program hav ing some 2,000 v a r i n h l c s 2nd !,On0 constraints. The compntor program w a s s a i d t o have been put t o g e t h e r i n 3 weeks and t o have 12ost about $1,1300 per optirni.zfng run . Tn many ways , the d e v e l n p m e ~ l t of a j o i n t petrochemical scheme f o r t h e RCD area would be c o n s i d e r e d a ra - t h e r l t s imPIe t t problem i n terms of c o m p l r x i t y and size, The b i g g e s t unknnwn factoi r would b e t h e demand e s t i m a t e s f o r t h e v a r i o u s p e t r o c h e m i c a l s , which w n ~ l d nr?t he d i f f i c u l t O r c o s t l y tc! determine wit!? a grin!! degree nf -?ccuracy.

6.25 !Jl~at nnx !leeds to !?c c!~ve! .~pec! .!s t!!e s p e c i f i c w i l l i ?mnngs t th!2 t h r e e c o u n t ~ r i e s t o s a n c t i o n a d e t a i l e d i n v e s t i g a t i o n of t h i s n a t u r e . Pro- bsb ly 502 c?!t this w ! i l l zlrezc!y ex!st .-is m a y b e determined f r n m tho del ib: : r - a t i o n s of t h e RCD s e c r e t a r f a t , ant1 there :Ls every gnotl chance t h a t t h e oirher 5 g x could b:: :!etTelei)ed, if 2 < lenr i r l c ! i c s t i n n cz;? be gv~~efi tc parc ic : i -

p a n t s i n t h e RCD t h a t :

-. such n j o i n t sclieme woi~ld be p r a c t i c a l . and of e q u a l b e n e f i t

t:: each,

- - t L , L,-,F.l+., ,,,I. ,,..,t.-.. ..,... 1 . J , h t , A , F,,., t L , ,A t .,...., ..,.. 1 A L l lC U C l l C l l . L 3 CCILII CUUllL L Y W U < A . L U U l l LtL J 1 1 1.1 UIII CLIC DLIICI'LC WUUAU

be g r e a t e r than t h o s e t11c:y could o b t a l n on t h e i r own,

- t h e s t u d y r e q u i r e d t o p r e p a r e t h e scheme would n o t be excess - . 1 - - - 7 - - lvcly CuJLIY ---.-I-- &>-'-----..-J-.-

LLIllL CUll3UIIi LLlg,.

.,.L - --- -- - J - - - L i l e e n r r c l s e s in t i is report lii?iie alreailji dei i ion~tr . i teb these iacts i n a g e n e r a l way. It is t h e r e f o r e proposetl t h a t a preinvestment s t u d y bc made along these l i n e s 2nd a s t u d y sh2et ! ins bezn prepnred Ear p resen ta t i on t o t h e I r a n i a n M i n i s t r y of Economy. The 1)eputy 1 . I in is ter of Econo~ny f o r RCD - , r C - d - - .t-.lJ -... - - . I *- ,.I-,- - # - - J - - . . I . - - a'- ,-I..-. . t . t , . - ..4= : - . 1 - . + . . -& - - -L - -J - - l U L L d l L J J.IlU.LLdLCU LU LlLC 1III>.~11>11 LlI'IC I 1 L1ll.Z l U C r l U1 J U l l lL V C L L ULl lCUI ILr lL

development cou ld be t lemonstratcd t o he p r : i c t i c n l , h e would be w i l l i n g t o -----..- prumurc a study of such B scheme in t!ic RCD.

6 . 2 6 rnL --- - 'L - ------- - * I . -- LL -- -----_.I _ - _ _ - __L.. L?. - L 2 _ - I . I l e L t 2 lwly ue L ~ c L ~ U L I S U L I I e L L l l d l l C2C;UIIVIIIIC V l l e s W I l Y L l l t : p L V l r l V L I U I 1

of t h i s scheme would n o t b e a p p r o p r i . a t e a t t h i s t ime. N e v e r t h e l e s s , t i le L - ~ - - c * . L - o e r l e l ~ c s of j o in t deve lopmen t r e m a i n and i t may be iiiore i n Iran's present in te re : ; t t o loolc f o r o t h e r p a r t n e r s w i t h whoin t o make t h e s e developments . I t is also pcissibie that a number of j o i n t scheiiles could be developed i n which d i f f e r e n t p a r t n e r s woulcl t a k e on d i f f e r e n t s e c t i o n s of t l ie whole scheme. Iran's present d i s c u s s i o n s w i t i l p r i v a t e companies i n j apan and I n d i a are examples of o t h e r p a r t n e r s h i p a r rnngen le~ l t s t l int can b e made. -. lnis cou id have t h e same e f f e c t a s long a s Tran approaciled i t from ti le v icwpofn t of o v e r a l l development of t h e pe t rochemica l i n d u s t r y and n o t on a p r o j e c t - b y - p r o j e c t b a s i s which cotlid cieveiop i n t o a s e c t i e m e n t of specia l1 i n t e : r e s t s w i t h less than optimum r e s u l t s .

6 . 2 7 i n any c a s e it is recomrncndeti t ha t tile Bank rnaintai~i an act ive interest i n and offcr i ts l le lp f o r t-he f u t r ~ r e d c v e l o p m c n t of I r a n ' s p e t r o - c h e n i i c ~ l and s y n t h e t i c Eibcr i n d u s t r i e s .

a m x 1 -- ...-- - Page 1

PRICES OF YAY-???El2 FIBEPS

I n common with many of the newer chemical compounds thac have L . . a * a a . . . . * 3 --- --.la CaL^- --.I-..- UCWZII A I I L L U U U C S U L U A I I U U LL Y 111 L I I C LtZCtZLLL UCCUUWZD , I l lUl l - I I ldUC A L I J C L p L L L C J

have shown cont inual dec l ines s i n c e their i n i t i a l in t roduc t ion . Over * ---.. El--- ------ I-- >--a. - - - A --> ..-- -A^- 1.. 'I. ---- L I I ~ p u r r I. L l v r y t z a ~ a , LUL IIIH LUIICC, r a y u u aliu ~ U L Y C Z J LCL u ~ d p ~ e ~ C L L C J LIUVC

shown a decrease of up t o 14% f o r rayon i n the U.K. and about 30-40% f o r --'I a- -La ? V ,- A --3 &LA 7 7 t? FmL- c-11--;-- --Ll ..L ---- ?.I-.. --a^-- p u l y r a l . r r 111 L L I ~ u.3 .a. ULLU L I I ~ U.R. l i a r L U ~ L V W L I ~ ~ L U U L ~ HLIUWH L A J L ~ L L L ~ J

f o r rayon and polyesiter s t a p l e , and compares them with quota t ions f o r co t ton

Table 1.1: Rayon, Polyes ter and Cotton Pr ices (G'S ?/?b)

1964165 :2 8 27.8 89.8 103.1 29.9 4rhc C I L L I Y W J ~ no #\cY .

LO . 2 5 . 9 84.0 Y J . Y 29.3 n m n

1966167 28 25.7 69.7 62.6 28.7 rrrr - r i r n #% n 1s1o1 l o o .LO 23.6 6 i .0 62.0 3 3.8 15168/69 :! 8 23.0 61 .O . *he. . I-,. #. .. 62 .O 30.4 I Y O Y ~ I U .L u 23.8 61.0 62.0 29.2

/ a 1 - 5 denier , , r egu la r type - l ist p r i c e 1.5, 3 denier! co t ton type - list p r i c e

x: -- Memphis T e n SM 1-1 16" CIF l.iverpoo1

Source : Cottori and General Economic Review U.K. Mnderrl Textiles Magazine? N,Y, Text i l e Month, Manchester

These t h r e e f i b e r s compete d i r e c t l y with one another and i t is s i g n i f i c a n t t o no t i ce t h e r e l a t i v e s t a b i l i t y of the cot ton p r i c e compared with t h e s u b s t a n t i a l decrease i n t h e U.K. rayon p r i c e and t h e polyes ter s t a p l e p r i ce .

The dec l ines i n the man-made f i be r p r i ces a r e even more s i g n i f i c a n t than those e h m i n t h e above t a b l e which shaw l ist p r i ces . It i s are11 known that: both polyes ter and rayon have been s e l l i n g "off 1 ist" e!specicllly i n t:he p a s t few yea r s . A t present branded polyes ter ntnple in reportedly wailnhle in the 1_I,S,A, low 38 d!lh and_ un- branded i n t h e mid 30's . Rayon has a l s o been s e l l i n g o f f l i s t and i n t h e hitec! Statee fnr j n ~ ~ t a n c e c!iac.nmt.i~g ~f ghngt 2 b!lh h a heen common In t h e pasit two o r t h r e e years .

Japanese p r i ces have a l s o followed these t r ends , p a r t i c u l a r l y i n the expert: ~ s r k e t where campet i t im wit !? Pmerican and Eurcpean ntn- rLV

ducers t akes place. Exports of polyes ter from Japan were quoted f o r t h e

ANNEX 1 Page 2

end of 1970 a t 40 d j l b on a c . i . f . b a s i s South East Asian des t ina t ions . It is understood t h a t some competitors a r e o f f e r i n g t h e i r product a t even lower r a t e s . It is a l s o understood t h a t polyes ter filament and a c r y l i c f i b e r s have experienced recent decreases i n p r i ce i n Japan.

While t h e r e may s t i l l continue t o be some fu r the r erosion of t h e syn the t i c f i b e r p r i ces , the re a r e ind ica t ions t h a t the bottom might have been reached i n rayon p r i c e s . The above t a b l e shows r e l a t i v e s t a b i l i t y of U.S.A. rayon l is t p r i c e s , and the re a r e now few rumors of discounting i n the U.S.A. I n t h e U.K., rayon s t a p l e increased from 23 t o 25 k i n Apri l and by a s i m i l a r amount i n Ju ly , 1970. Prom a four th q u a r t e r 1969 low of 19.18 k / lb four th quar t e r , 1970 d e l i v e r i e s a r e now quoted a t 22.59 d l l b . Other evidence f o r s t a b i l i z a t i o n i n the rayon market comes from t h e c los ing down of some uncompetitive rayon plants recent ly . I n Western Germany polyes ter producers have recen t ly announced p r i ces increases .

I n view of these developments, and given the s t rong competition amongst producers and hence the lack of s p e c i f i c knowledge of a c t u a l t r a d i n g p r i ces , and the vast range of f i b e r types and s p e c i f i c a t i o n s , i t is d i f f i c u l t t o genera l ize p r i c e da ta f o r the man-made f i b e r s . However, t h e following t a b l e is presented a s a synopsis of cu r ren t l i s t p r i c e s of man-made f i b e r s i n the U,S ,A. and the U.K. Even t h o u ~ h it is only a brief synopsis of more extens ive da ta , t h e t a b l e shows t h e v a s t range of f i b e r types, and t h e i r cnrrespondingly hrge range nf prices. The price^ shown are f o r t h e simple types of f i b e r s , i . e . undyed and with no expensive a f t e r processing srrrh a texturinatir?a. The range of prices n h m . after each f iber usually r e s u l t s from d i f f e r e n t types of packaging.

n hhni'v' 1 IYI1I;U * Page 3

Representative C u r r t m t , l , j st Prices f o r R K - - . I'--l.* W'L - -..- I~;~I - I , IZU.U ~ L U Y L . ~ i~ 17.s.A. 1y.I.Y. - - --.

(TJS f /I.b)

Acc?.Lat,e Staple 3 -5 ..t n

'Triacot,? t e Siap1.e 2 .>-G ,? ,-, I!.aycm Filament f .I / !)

d-i.t to :; (10 i;rjg -

Acetate Fi lament 15 .-.,

'(5

'l',yrt? Cord ' Q T ~ C131.d S t;aple

r: . 1'ol;yre s ter -

S t aple

Fil ,mle~it

1) . Acryl ic:

Staple 1-24 1J .I; . 1.5-6 11 .S . A .

1-5 carpel; 'U .I( ll.S.A.m

3,11.5;,0.9 toti 11 .K .

A.Inmx I Page )r

AhnTpY 2 -...,A,.

Page 1

ESTIMATES - OF IRANIAN USERS AND IMPORTERS

- Lne missioll interviewed four of t h e main '&i importers , the two

t i r e companies, the Aliaf nylon company, the I n d u s t r i a l Credit Bank, IMDB L , and t h e Cnemicai Division of the Research Group of he 'Kinisrry of Economy, t o sample op:lnions of t h e present use and expected growth of MMF over t h e

d next 3-5 years . lne t n r e e l a c t e r organiza t ions a r e i n v e s t i g a t i n g synthet i c f i b e r projeclts and have made assessmentR of the market f o r these p ro jec t s . I n add i t ion , t h e mission w a s given a t a b l e (shown here as Table ij of pre- s e n t arid f u t u r e demand f o r MMF which was prepared by t h e Ministry of Econlmy as represent ing Its b e s t es t imate of the demand p a t t e r n . The consensus of opiniori from t h e s e sources is summarized below.

Cel lu los ic : Stap le demand is current ly 35-40,000 tons /year and f i lament d G n d about: 6-7,000 tons jyear . Any increase i n demand w i l l probably be due t o iricrease i n t h e populat ion more than any o the r f a c t o r s o that: a 2% growth r a t e may be expected i n the next 3-5 years . The Ministry of Economy expects demand w i l l a c t u a l l y s t a r t t o dec l ine by 1974.

Nylon: Detnand f o r t e x t i l e y a m s can probably be estimated a t 8,000 t:ons at: present: (1970) with 15% accuracy, according t o importers & Aliaf . The Ministry of Economy f e e l s demand was as high a s 11,000 tons i n 1468 f o r a l l nylon, o r say 9,500 tons f o r t e x t i l e y a m s . This seems high comparecl with t h e o ther est imate.

T i re Cord: Present usage is 1,800 tons lyear . Both t i r e compan:ies have recen t ly received l i censes t o double t h e i r production s o t h a t t h e i r demand could be 3,600 tons lyear i n say 1973. However, one of them expects t h a t t o t a l new t i r e demand w i l l then be 47,000lyear. and on t h e rough bas:Ls t h a t th.e t i r e cord re!presents 10% of the t i r e , t h e t i r e cord i n new t i r e s i n 1973; would amount t o 4,700 tons. The d i f fe rence between t h a t and t h e 3,600 tons used by thie present t i re producers would e i t h e r be imported i n t h e t i r e s themselves o r could be used by a t h i r d l o c a l producer. There i f 3

t a l k t h a t a t h i r d conlpany is t o be authorized t o make t i r e s .

Polyes ter : Opinions vary as t o present consumption, but a r e i n f a i r aa;reement as t o t h e ~ r o w t h r a t e s , both f o r s t a p l e and f i lament . For . . s t a p l e ; t h e present usage es t imate va;ies from a low of 2,100 tons lyear t o a high of 3,500-4,000 tons/year . The median i s around 3,000 tons lyear . For f i lament, present es t imates vary from 6-700 t o 1,000 tons lyear , with t h e median around 800 toras/year. Growth r a t e s f o r s t a p l e a r e expected t o be 25%/year, a t f i r s t dropping t o 15-205: l a t e r on, but with o v e r a l l arowth r a t e s through 1975 of about 20%. For f i lament the o v e r a l l growth r a t e w i l l be

ANNEX 2 Pagc 2

Xigiier atioi;t 25X,!jrr., wit!: t!;:! i f i l r . !a? growth rr.ce nf 1!J" / r~~~! .ng t _ ~ 3

somewhat s l o w e r ra te o f 202 l a t er on.

A c r y l i c : Probably b e c a r ~ s c of t l r c ? c lose control h e l d on t l ~ i s ntar- --.

1. Ket .- ;.,y a few Jni-,iiiicse z .....A - ',,.-" L . l t l k , u r c c r a, t!;cr:? i:; i: !l.!i;!: degree ce : ?u i s t ency of es -

t i m a t e s of I)rest.nt tiernand. 'I'liese show 1,500 tonslyr. b e i n g used a s f i b e r and anotiier 300-1 ,OCO ~ ~ i ; s / ~ i r . a s y a r n . Grout!: ra te estimates a r e :!lsa cnn-

s i s t e n t around 2 5 % / y ~ : . except for one i lnportcr who put the growth r a t e a t < re, l . ~ ~

I J L I

t i i j s i i i forii iat +I . . . ~ , . 1 1 , . . . 4 ~ - t a b l e car! be h o w t l ~ ! concensus of o p i n - i o n of presrtnt use, growth r a t e and

iwnct. f 1 1 i u r 6 ticmnnd for 'ViiiF's in Iran .

Ahl?\T??U 2 ' Y I . . U , .

Page 3

I.iy101i Ycar- i {J, [jcjo

i,Jylon Tire (.:or6 1 ZOO 'i'i'otai Ryion -7--;".7.; , , I I!.:

7, 7

.tzc! rester S i ;q>i s 3, GOO Polyester Fi1men.l; 000 - Tot:& Pol:yester 3,6oi3

Acqr l i c 2, ];Oil , ) I ~ i )

--- - ; .. .roi;;d. S,pii;j-~e t i c : : ~ i : , (1-6, j

i.. 1.0 tCL-~ 1,j i.: (-1 6 (x.1

. , J (-5 6 -..

&/ Pssume:; a l l t i res w i . l . 1 be 111:tdc locr11ly ~ s i n ~ : L o c d l y supp l i ed t i r e c:ord.

( ) Ind ica tes a gro .c~t i~ r a t e de~.-ivc.c.1 by c:dcu:lclt.iol~.

AhlalCV 2 n L i l i b n J

Page 1

I n t h e foll!owing discussion, an MMF p lan t is considered t o be one which takes a chemicai precursor, transforms i t by fu r the r chemicai processing t o a polymer which is then drawn and twisted t o form a f i lament yarn which is then eithtrr packaged as such fo r t e x t i i e use o r is c u t i n t o s t a p i e wniclh then i ~ r packaged. The p lan t the re fo re cons i s t s of two main items - a "f ront end:' which resembles t h e c h a r a c t e r i s t i c s of a modern chemicai p i a n t , and 4%

"back end" which has many of t h e c h a r a c t e r i s t i c s of a t e x t i l e p lant .

Economies of Sca le

The economjles of s c a l e of an MMF p lan t the re fo re a r e a combinat.lon of t h e econolnles thal: would apply t o chemical and t o t e x t i l e p lan t s . Thu13 i n t h e chemical end of t h e MMF p l a n t , t he well known "0.6 fac tor" r u l e of r e l a t i n g capacity t o c a p i t a l cos t general ly app l i e s . This means t h a t i f one were t o compare t h e c a p i t a l cos t f o r two chemical p lan t s of t h e same type one would f ind t h a t the r a t i o of t h e i r c a p a c i t i e s t o t h e 0.6 power would be equal t o t h e r a t i o of t h e c a p i t a l cos t s . I n o ther words t h e capitalt cos t does nol: inc rease a s rapid ly a s does t h e capaci ty . This r u l e applier3 because, when a l a rge r capacity chemical p lant i s requi red , i t is o f t e n possib:Le t o ob ta in t h i s by increas ing the s i z e of t h e equipment r a t h e r than by adding add i t iona l un i t s . I f complete add i t iona l u n i t s were added then t h e cap:Ltal c o s t would tend t o rise d i r e c t l y as t h e capaci ty rises.

This tends t o be the case when considering the r e l a t i o n s h i p between capaci ty and c a p i t a l cos t i n the "back end" of an MMF p lan t . I n t h i s s e c t i o n of t h e p l a n t , when one wants t o obta in add i t iona l capaci ty , one o f t e n needs t o atld add i t iona l u n i t s . For example one would need add i t iona l twis t ing and spinning frames t o be ab le t o process more yarn. However, economies of s c a l e do a l s o apply t o t h i s type of equipment a s is we l l kralown .

Scinle economies a l s o a r i s e from the f a c t t h a t increases of p lan t i n € ras t r u c t u r e (such as u t i l i t y supp l i e s , s to rage f a c i l i t i e s , t r anspor t f a c i l i l ~ i e s , e t c . ) and adminis t ra t ive s e r v i c e s do not r i s e a s f a s t a s increased capacity of the production u n i t s . I n o ther words, fo r a given p lan t one would i n s t a l l c e r t a i n s i z e s of b o i l e r s , warehouses, ma te r i a l s handling equipment ae we l l ae c e r t a i n adminis t ra t ive s t a f f , s a l e s s t a f f , o f f i c e f a c i l i t i e s , eitc. I f one then wanted t o inc rease the capacity of the p lan t , i t would not be necessary t o increase the capacity of the in f ras t ruc - t u r e and the adminis t ra t ive se rv ices i n the same proport ion.

ANNEX 3 Page 2

With the p o s s i b i l i t y of achieving economy of s c a l e on these f r o n t s , t h e size of ecnnnmical MMF plants han a degree of flexibility which wnuld not be a v a i l a b l e t o a s t r a i g h t chemical or a s t r a i g h t t e x t i l e p lan t . For example, an MMF plant producing two fibers, neither of which has sufficient capacity t o j u s t i f y a competitively s ized chemical p l a n t , might be found to be quite competitive becau~e of the economies that can be achieved in t h e " t e x t i l e end".

S ize of MMF Plan t s

Data ava i l ab le i n Tex t i l e Organon gives t h e number of chemical nl en ta 4" - n e t yAalrLGa ,,, ,,,,,, c f the countries i n the wcrld, and a l s c the prcductive capacity of these countr ies both fo r c e l l u l o s i c f i b e r s and s y n t h e t i c f i b e r s . By dividing the n;";;ber ~f plants in to the prcductiue capacity fcr each country, one can a r r i v e a t t h e average s i z e of a p lan t i n t h a t country. - 4 - -L-.- +L,+ - - 1 1 . . 1 - , 4 - -1 +.,-, in size fram a I=-,. =f 1,300 tor;s/Year L L L A ~ J L L V W D L L L Q L LSAAUAVPAL Y J - Q L L L D v a L y

in such countr ies as Peru and Uruguay t o a high of 40,500 tons/year i n A - * e + - ' - &, the other hand, synthetic fiber plants vary frcm a l3;r cf A L W C l r La.

300 tons/year i n Uruguay t o a high of 16,600 tons/year i n t h e United S t a t e s . &-I,..,,- -F ..-..-,.. t,. tL.. n..-r....-.n ,4..- - F ..lo-+s

& & L C D = I - . L & U L S ~ VL C V U L C S S L S L G L LV L L I S Q V G L ( 1 5 ~ J I L C U L y A a & n L o ic, *I.* . .~. ."t14-.3

C L . S . CVU. .LL&SO,

and not t o the absolute p lan t sizes. However, t h i s does give one an ind i - cation af t h e range of sizes of ?-DfF plants and of the diffi~iilty of try ing t o decide what would be an economically s i zed p lan t .

i 3.1 : Average i7iai1t ~ j . z c d f o r Man-Made Fibers ----

~verage P i a n t To td~ <$ of Total G o . of 5 of Li.7 Categoq Capacity Plants Y1rn.t~ -

9yi j 2h 2 7 . - C - l greater t'nan 30 .L.L

C - 2 30-.?(I ly85L 45 76 -- 3 2 c - 3 -zo-,jo 97 8 23 f u 3 o c - 11 less than 10 - 299 8 - 6 3 - 2 7 - liorld Ave~:ag:e 17 ,1400 Total 4,121 100 236 3.00

- - - - - - - b n t h e t i c Fibers 2 l-.---.

S - 1 g r e a t e r than 1s 2,160 36 130 17 5 - 2 15-10 2,2O'? 39 191 2 5 S - 3 10-5' 818 1 4 I. 09 14 S - 4 l e s s than 5 - 661 - 11 2 2 - 414

World .Average 7,800 Total 5,926 100 761 100

a/' Avsrage plan t cqaci.ty. in each country, taken as t o t a i na t iona l capac: i iy - divided by nmnber. of p l an t s in the country.

Co1mtr:ies in each category.:

C - 1 : Austria, Lbeden, Norway, IJ .S .A. , Finland . .

C - 2 : West Ge~mruiy, lh-liteti Kirr,rciom, East Germany, U ,S.S.K., ,Tapan C - 3: France, I.tnl;y, Netherlands, Spain, Czechoslovakia, Poland,

Ro~mnia, CanMia, Cuba, T a i w a n , India. C - 1 : 1les.t of t h e 'World

S - 1: U.S..A. S - 2 : FTance, West Germarly, 1Jniteti I:lngdon, Japan, Poland S - 3 : Belgium, ItiLy, Eletherlands, Swj tzer land, U.S.S.H. TLomania

- 1 : Rest of world

ANNEX 3 Page 4

A rough "ru le of thumb" t h a t has developed from Bank experience in the case cf ~ ; q t h e t i ~ fiber plants s e e m t~ indicate that about 8-10,000 tons/year of capacity is required f o r the p lant t o be competitive. This -..I, .-.C +-&...-I. ,afi.- 1 ,...-A ern- T F P fnvee ti gations r u r s U L LLLUIW U S v S A w p s U L L U l l l L L U

of 2 -1 ,-en a,, -.-l,- ~ A ~ L L L O , ULLS L L y LULL

producer and t h e o ther producing both nylon and polyes ter . When these ,i-..+- --..,i,,~ ,, ....,.a&.. 4.. *I., ......,.. cr-.tn nnn t ..,, , a * c -.-- 2 yraucb r s a c r r c u c a p a c r ~ y A L L r k r c r a ~ r ~ r ; u r u- I U , U \ I \ J r u ~ w l y c a r , r~ w a o AUULLU

t h a t t h e i r p r o f i t a b l e s e l l i n g p r i c e s came more i n t o l i n e with commonly ,,,,,a-,A .,,-l.,c ,,,I..,, a , ,el.,, ,,-c- -6 e L , ..,,l-1 LCLUSLLL&CU IIIQLILSL v a L u c a A L L U L L L C L p a L c 3 VI LILT: W U L L U .

7.- -->..- L- & - - a . &La, rule ef &L.,L ---I c, >,--,I,, ,--- 1 1 1 1 1 V L U C L C V L C U L L11A.D L I I U U U , U l l U L V U K V C I V Y a V U l C t j l Z L l V 2 L t l l l -

t i e s about ,the average s i z e s of MMF p l a n t s , the da ta i n T e x t i l e Organon were --- uJru -2 to calculate the at-ersge eiz2 of ce~~i i : ts ic Eiyiiihetic fiter f o r each of the 45 countr ies f o r which data is presented. I n t h i s way a list "f plant Sizes -Mm o+,taiiled tot- for celiulosic aiLd s y n ~ ~ e ~ i s f i b e r s . By analyzing t h i s l i s t of average capacity one could a r r i v e a t some t e n t a t i v e conciusions r ega rd ing what might be the competitive size of MMF p l a n t s . The p lan t s were gathered i n t o s i z e ca tegor ies t o gauge what _ _ _ L . _ _ . . L . _ c l _ . - L L _ - 1 _ - c - - - 1 L L 1 - - - - L --c ------ _ - I - - ..- L L - . . - . . - ' I ----- 1c-- - - _ 1 C o I l L r ~ u u L ~ v n L L I ~ p l a r l L a w l LLLLII ~ U C L I C U L ~ ~ U L y m a n e ru C u r LU r u ~ cupacl ~y anu t o t h e t o t a l number of p lan t s , as shown i n t h e following t ab le :

The t a b l e shows t h e marked d i f fe rence i n t h e average s i z e of c e i i u i o s i c and s y n t h e t i c f i b e r p ian t s , with the former more than twice t h e average s i z e of the l a t t e r .

When one examines the de ta i l ed da ta used t o prepare t h e c e l l u l o s i c p a r t of t h e t a b l e i t can be shown t h a t :

- countr ies whose average p lan t s i z e i s 25,000 tons o r more account f o r 50% of a l l the a v a i l a b l e c e l l u l o s i c f i b e r p lan t capaci ty .

- countr ies having c e l l u l o s i c f i b e r p lants with a capaci ty of of some 18,000 tons o r more have 50% of a l l these p lan t s .

- countr ies which a r e s t a t e d t o be p a r t i c u l a r l y competitive i n c e l l u l o s i c f i b e r s (C-1 t o C-3) tend t o have an average p l a n t s i z e of 10,000 tons or more.

The same ana lys i s can a l s o be applied t o the syn the t i c p a r t of t h e t a b l e and i n t h i s case the following conclusions emerge:

- countr ies whose average syn the t i c f i b e r p lant s i z e is 14,000 tons o r more account for 50% of a l l the capaci ty of syn the t i c f i b e r s .

- countr ies whose average p lant s i z e is 7,000 tons o r more account fo r 50% of a l l syn the t i c f i b e r p lan t s .

ANNEX 3 -- -- Page 5

- countr ies which a r e s t a t e d t o be p a r t i c u l a r l y i n syn the t i c f i b e r (S-1 t o S-3) have average p lan t capac i t i e s of 5,000 tons or more.

From these conclusiona i t would not be f a r fetched t o say t h a t f o r a country t o be competitive i n c e l l u l o s i c f i b e r s , i t s average p lan t s i z e should not be l e s s than 10,000 tons , probably would be around 18,000 tons , and i d e a l l y would be more than 25,000 tons . By the same token f o r a country t o be competitive i n syn the t i c f i b e r s , i t s average p lan t s i z e should not be l e s s than 5,000 tons , would most probably be around 8,000 tons and i d e a l l y would be more than 14,000 tons. The major l i m i t a t i o n i n t h i s ana lys i s is t h a t i t has d e a l t wit'h average p lant s i z e s i n each country. Firmer conclu- s ions could have been drawn i f the ana lys i s had been based on actual plant s i z e s w'hen a c t u a l mediums and averages could have been determined.

However, i n s p i t e of t h i s l i m i t a t i o n i t is f e l t that t h e ana lys i s W ~ V P R R_ wnnd i n d i ~ n t i n n nf the size an plant .shnr_?ld he tn he ~nqp_t_itFvp_~ O- - -- C ) - - - ---

ANNEX 4 Page 1

ECONOMICS OF PRODUCING SYNTH_ETIC FIRER IN IR-AN

I n t roductlon

I n what follows an at tempt is made t o a r r i v e a t some generalized. productian economics for synthetic f i b e r p r d u c t i o n i n Iran. Tl.e m a i n sources of da ta which has been used i n t h i s ana lys i s a r e t h e many p r o j e c t invesrigatians that t h e World Bank grcup he= dane i n recent years i n s y n t h e t i c f i b e r p r o j e c t s around the world. Natural ly t h i s raw da ta has been made available ta the Bank cn a gtrictlg c~xfidential b m i s and ncne cf it is p r e s ' e n t d i n t h i s exerc ise with reference t o any s p e c i f i c p ro jec t . The purpeae ~f the exercise is te t ~ ; te generalize frcm t h i s specific data in. order t o come up with order of magnitude es t imates of what t h e c a p i t a l and cperati:ng ccsts %auld be fcr a synthet ic fiber p l a n t in a eotii~trj: l i k e Iran. This exe rc i se is f raught with d i f f i c u l t i e s r i g h t from t h e s t a r t because i t is ar-..l.., ......-. J-C- - , ,+ .~ ,- A-..,'I ,,,A e,- -..--a C J - - r *..-c~ --- ..&.I -r. --..'I 9 L- U A a W l L L e U p U A I A I I A U A U l a L . A U l L U C V C A U p s U A W L D p C L A L A L D A L L I O L A U L L D W I L A G I L L U U A U U C

v a s t l y d i f f e r e n t from those t h a t would p r e v a i l i n I r a n . However, i t i s f e l t +I.** a- ...a -I. *-c----** . - - J#. J 1 - L . I - &L-* --..A - - * r - - & - - -a- L- -..A- c..- LLLUL CLI IJU~LL A L L L U L ~ L A I L J I L AD U V C I L A U U A ~ L u a L ~ U V U C ~ L L U I ~ L C U GULL ue uauc LUL Bii

"order-of-magnitude" type of exerc ise . I n der iv ing the general da ta a c e r t a i n & . > & 1- -- -3 ~ ~ I U U I I L U L J U U ~ I ~ ~ E L - uasau Oii other experieiice - is i i i ~ 0 1 ~ 4 and iii this respect he lp was ob ta:Lned from the IFC Engineering Department.

The following t a b l e w i l l g ive a general impression of the range of projectri t'nat were in t',is r

Fiber

Kyion Nylon iYy ion Nylon n - - - r o l y e s t e r

S tap le Poiyes te:r

S tap le

Polyes te!r Poiyes t e r

Filament Poiyes telr

Filarnen~t t icryl ic

Region

..a . .-, miaa.Le East South America South America I r a n

Far E a s t

South America

South1 America

South. America - l r a n

Expansion Expansion - rsxpansion New Plan t

New P lan t

New Plant

Expansion

New P lan t

Expansion New P lan t

S i z e of P r o j e c t -

"Proposed a c r y l i c p1an.t being s tudied by IMDBI

ANNEX 4 .. rage 2

A s can be seen, t h e da ta come from a v a r i e t y of d i f f e r e n t types of p lan t s of d i f f e r e n t sizes and i n many d i f f e r e n t a reas of the worid. The countr ies i n which these p lan t s a r e located a r e mostly a t about the same s t a t e of economic development a s I r a n , which helps i n drawing s i m i i a r i t i e s from these cases t o an I ran ian s i t u a t i o n . Moreover, t h e two I r a n i a n examples se rve as a reference point for modifying the data .

Basis of Production Econondcs

Production economics were developed f o r a hypothet ica i new p lan t which w i l l produce a given f i b e r s t a r t i n g from a petrochemical precursor. The raw mate r i a l s would be caprolactam fo r nylon production, DDMT and e thylene glycol f o r polyes ter production, and a c r y l o n i t r i l e For a c r y l i c f i b e r production. A capacity of 8,000 tons iyear w a s taken a s being about t h e mfnimum economic s i z e t h a t should be considered. The product would be mostly f o r t e x t i l e use and would rece ive no spec ia l i zed a f t e r t reatment such as t ex tu r i z ing . The nylon p lant would produce only f i lament f i b e r and t h e a c r y l i c p lan t only s t a p l e f i b e r . The polyes ter p l a n t would produce s t a b l e and f i lament with about 33% of the production as f i lament.

bNNR'X I .-...-... - Page 3

ECOI\JOlIICS OF PRODUCING SYIJTILFTIC FIBER IN I W ~ ~

Note : ORII~-OF-MAGI~IT1 .~E ACCU, IACY ONLY

l3,axi.s: 8,000 T/Y of Fiber produced j.n a new and independent p l an t

NYI;OI\l ACRYLIC POLYESTER

Startfing Material Caprolactam Acr;yl.onitri.le DMT ; Eth . ~ l y c o l A m t nsqd/ton fiber 1.10 tons 1.0 ton 1.10 ton; 0.4 ton Unit ~ o s t 20#/lb; :6440/t 13# hb; ~ 2 0 , ( / t 13$/lb ; $ 2 8 7 / t - ~ ~ ~

l l $ hb ; $21~2/t,-~;1;

C a ~ i t L l Cost; (9; mill-ion) - Fixed Capital 15.00 1.6 . 00 Working kapltal (15%) Total Financing m u i t y (3G) Loans (7%)

Production C;osts ($ mXLl~.on/yr) ---- Raw Material ? .98 3 -30 2.52 Other Materials 1.19 ( 3 4 ) 3 ' 1.15 (sq)?e 0.70 (:?O$)x- Labor 1 .146 0,?2 1,115 U t i l i t i e s Total Operating Cost A M n & Sales nep_rer.i at . i nn - - --.------- In tereis t Ret on Eqi~j.%y

* $ 01, raw mater ia l value required f o r I1other" materials

Fnnu I4o. 30G I , , I . O $

INTCRNATI N A L OEVI-I OI'MCNI " C C W , h Y 8 - f

INTERNAT IO'iAl. HANK IFOR 0, ,.-,.-rc,,<.7 ,-, >.,,-. ,.r\,. , *,......,.. INTERNAl I IY4AL f lNANCt

I 8 # . " > I -.7>- 8 ,\ 8 0 L?" r \ L L L . " . > I "<St. 8 , V " ? " 4 , 3 t~L"CL", ' rV, , . !" , C(-,Riyjii;, i i ii\i

?RE INVESMEHT P!?OGRbV!4 - STUDY DATA SHEET

NAME OF PROPOSED STIIDY: m t u r e denand fo r f i b e r in p a n , -- - -- -------4

Man-made f ibo r I 1rm

i i i E i ? C S i T o prodic t tho tunoun-t of vnr:i.ous f i ho r s t h a t rd.11 be consumed i n Iran i n tho next !;-lo ~CRI-S .

I

Indus t r i a l

3. SCOFI: Cclnduct an end-use study of fi .bcr d c n ~ n n c i through det,niled interviews 16th te:xtj.le ~ r ~ i l l operators , t e x t i l e ~ ~ ) l o l e s : ~ l e r s and r e t n i l a r s , a sample of urban and 1~ura1 con:ilunt?rs, tyro manu f'ac t.urers, hi t t i n g mill. c,pcrators, f i .ber 5.rnpurters e t c . l'iie study t o o b t r f i ~ ~ and sy~it,!le:;ize u se r s ' views on quan t i t y of each LMJO of Fiber t h a t w i . i i be de~nnnded espec:i.aLl.y i n view of decreased s;ynthetic f ibe r p r i ce s and fu tu re competition between cot ton, cellulesics zqd pc:!yes';er

I----. - I

I The study w:i.ll a l s o ca lcu la te the cos t of producing f a b r i c s with dj.fferer1.t f i b e r blonds - uslinr. e q o c t e d Sut.l.~re p r i c g s of f ihers grid current, text:i_.!.e

I m i l l cos t s (from l,Ilc! LLIRD slncly) - t o give an inclcpentlcnt base from wh;.ch . - - - - ~ J u d e r ; ~ ~ : ~ z ~ - ~ r ~ r ~ ~ ~ ~ n ~ ; _ p f ~ t u ~ ~ ~ ~ a u d . - -- -- -- U. 8Al:KGROUND: ( a ) Related Stud ies (b ) Other Ava i l ab le Data ( c ) Expected Data Problems

The USer:i - espocial.:ly the Tl?Rn $~th-on-t.nv a.t'.>rrll oa .LA,.- L z - " ".."""L "..--.-"" )fjjlljB?,ly cf Cr-nnnmv

Y"-"""V -.-, L 2 -

I u~rr:.r.iie cuffIsiiniers - ]nay rloi.

s t ud i e s i n f i b e r s be aware of t h e d i f f ~ ? r e n ! f i b e r type, or their prnpe:-t.icl.. T h i , w i l l r equi re special.:.y desicned quest:i.oru~nires. The exken t cf

1 I

use r ignorance of f i b e r s w i l l he i - U p c d a n f r - . - . - -

15. 'iibllNG: j a j Durat ion and Phasing o i Study ( b j Des i red S i a r i i l l g vaie 4 I

6 months, interviewing can be done A s soon a s pc)ssible. -:-..1+--,.,...-1... 4 I. A 4 PO----& ..-,.-- o u t r u l r r u ~ u v u a ~ . . y WLUII U I L I C L C I A ~ ~ U J G L i ) .

Data co l lec t ion and ana lys is w i l l b e

I cent ra l ized .

--- -- 6. COMWENT ON POTENTIAL STUDY SPONSORS: I I Mnis t ry of Economy, industrjaj. Credit Bmk, DiilBI, are ail i n t e r e s t ed in and hwe

st.udied t o some extont fu t~u-e f i b e r demand. They might bp wi l l i ng t o sponsor a i n i n t m t r l r l ~ r . , ,,"A"- ""L.",,

17. PR08JECT(S) EXPEClED TO RESULT FROM STUDY ( i f known):

I ( a ) D c s c r i p t i o n (b) Est ima ted Investment (US$ e q u i v a l e n t )

Probably 2 syntfiotic f i b e r pl .mts (polyester , Eventually $100 nt113 on a c r y i j . ~ ) , L o ~ s iijseiy, o c e i ~ u i o s i c f i b o r ( c ) F inanc ing Need and P o t e n t i a l Sourci! plant . Clthor syntl'letic f i b e r p l a n t s i n fut;ure. Bank Group could p a r t i c i p a t e

'8. ORDER OF MAGNITUDE OF SiuLIr COST jujj e g u l v a i c n i j : sheet Prepared by: Petor Glenshad

I $30,000 Dept. or Agency: mm Date: ~ p r ~ i 26, 19fL

~;STII('SNT ON PR lDR l l l RANKING OF STUDY: Sheet Revised by: -- - - --

i I ---- - I-- ---1 I

- -

I I

L-

F O R M Nu. 386 . O I IN'II fINA1 I ( M A L lII:V(I Dl'b!! N I IN I I ' I I P l A l l ONAl. Hiu'4K f ~ O I f I~ l l I 'RNAl I WAI. t- II4ANC.I: ( 1 1 . ~ 3 ) AS~IIC: I A I 1r04 R~~WSII I I I ( I ' I I ~ ~ ANII IN V F L O I ~ M I . ~ ~ ~ . ~ . O I ~ I ~ ~ I R A I I W

ANvl!';.{ 5 PRE l NVES IMENT PROGRAM - STUDY DATA SUPPLDACNT jTcF -2

No, : ----~ ( t o be filled in when possible)

- --.---- , Numboron ,; am-p----.--------.-- TLNTATIVE STAFF IN0 l y p e o f Specialist To ta l Mar,-Months 3 ( a ) Fore ign P ro fess io r~a l S t a f f :

Mannade f3.hor mat-kol;j.nf: expart 3

-- - - (b) L K ~ ! p r ~ f e s s i a n n ! s t a f f : Mwket Rcscarchers

Texti le cqjert 6 (c ) Local Suppor-Ling S t a f f : Stat j .s t ic i t l clerlcs,

i u rrency--

(a) Pro fese iona l S t a f f Costs 1.0,OoO (b ) Equ i pmcmt

( c ) Other- (Trave l , non-prof. s t a f f , c t c . ): 2,000

-- p- I OTHER COIIIKNIS I

I The f n r e i p expert weuld ,o;uic!e t!!e effartr, =f a l ~ c z l ~zrke?, rzsearzh firl.il 'ijy d e s i g n i n g t h e s t u d y and in te rv iew schodul.c, and then arlalysing t h e da ta when it had been ~ a t l ~ c r e d arid col lated. He iiould guide the proparation of t h e repor t .

I

~PP!MLPI I? Prepared by:

Dept. o r Agency: I , nit.- "---. I

Fonrr No. 38(i I N T F H N P , l I ONAL 01-Vl'l.l~l 'i$l 'Nl I N I C R N A T I C N A l . I IONK FOR !! . ! .C9) A < < , V , & , ,m

INTI-RNAI IO(4AC F I N N C E ..--~,-,.. . , ..,. !?cc<,+!x.!~T~:!c? ! 3: ,A::: Dt?:L!.O,p?r?t~: . C!:!!DOI:AT I G?: u,j j j jj;;qA -

I Area: J!ountry: I~ec to r ( s ) : I r a n , Turkay and Indus t r i a l

I------- - -- NAME OF PROPOSED STUDY: F e a s i b i l i t y of n Jo in t RI:D Petrochemic,d ljldustry

_ _ _ _ _ _ . _ - _ _ I _ _ - - - . _ - - - L I ---- pu8pGsE:

- .----.-.- To determine the b a s t s npon which a v iable potroche~d-cal irldustry could bo establ ished hi t h o RCD aroa,

I

I 3. SCOPE: 1. Prepare clenxr~d estimntcs f o r dl pe t rochdca3 . s i n Iran, Turkay and Pdcist;an . unti l 19UO. I

I 2 . Based on d(:nl:ind; ties-ig:n a nchcme t o produce the petrochemicals from l oca l

raw rna.teri als us5 ny! oconorrdcal I.:! s ized pl.ants. 3 . icii.oi:aie tile p : i ~ ~ ~ i ~ s LO tho 2 c01~1i;l.i.e~ SO i t iat eachi bcnefi ts equdig . f r c > l n

the nclic~no, auld tnlting account o f exicistiing plants, iocatiion of ralxi rr(ateria1:; and trn-nzpor!,ntinr~ ccnjlonri~.: a

i

L -A- -- 1 q. BACKGROUWD: ( a ) RcIat~?d Studies ( b ) Other Avai lablc Data ( c ) Expcctcid Dat.3 Problcms I I I!??a .>- T.nrsl -.-- pnt.mrhonii --- ..-..v...-...+- p a l UUII~CUIU l larnor. ,A n l . t - t n l m t ~ n u.7 V - L I I I , : L YLY ,.il 11 .,..ILL 1

Sub-::ector co~:pmj e s have made be d i f f i c u l t t o m;~l<o. Studies many relevant s t ~ i d i o s . Possibly a r,?n?:e of'

I demands wj.11 nee:1 t o be developed.

I I I ------ - -

-. 5. I IMING: ( a ) Duraiim and Phasing of Siudy ( b j Desired S i a r i i n g Date

Phase 1. Dlemclnd study > 9 Tdnn i - i f-i r - q +i r l n =f rfi7d mmato;--j ?day preaGyt : rnGitka A-".. "...A. A W < Z , ".a. \,AA

m-i.--- A L - o c l u r x < utu enti of pl:inl;s, (IOUJI t ry pl.ms, e t c . 1 1971.

Phase 2. l>esi(_:n production r;cl~enie, :tllocatc p1.wl.t~ ) 6 morlths ------- - ---.- -

6. CIW~R4ENI ON POTENTIAL STODY SPO14SORS:

I Tho irzrij.r!n Depui;;y YInister of Ecorlonry f o r HCD Affairs has offered t o propose t h a t such a study be w~dcrtaken by the llCU S e c r c t a r i . ~ t e , which.wou3.d be t he logical spolisor..

I I I

IFGoJroosxProrro ro RESULT mm srum ( i t mown): ( a ) Description

-1 I (b) Estimated Investment (US$ equival,?nt)

Some 20-30 pctrochemicd plant:: when Totdl investment co~t:L.d reach $;!;00 tihe 6 ~ , k l e I n ~ i .8 ~0ml ,~ .e t0 - i.ncludj.ng (c) Financing Need and Potential Source mi.] 1.i.on. synthetic f i b e r p1,mts External. f innncing w i l l . be ~ ~ e c l ~ i ~ . ~ ' e d

I I I 3 i 1 tho form of loans and equity. I 18. ORDER OF wsNliuot OF SiuDV Lor i (us) e q u i v a i c n i ) :

I 609, GGG --

~GIITB~'s=~NT ON P R I O R I T Y R A N K I N G OF SIUDY: / Thi [I st.udy shodd be s t r r to t l as noon no p o s s ~ b l e , bofclre nor-(3 pet,rc,chomic:il pro;iccts nro comitl,cd i n ihn j cour~i.ri eu w i i i C ~ L wouid m&.o iriq)icrnoniaij on of i'ne 1 echomc moro d l P f i r u l L .

Snect Prepared by: Peter Glenst-rarr DcpC. or Agency: IBIu)/IPu Dais: a--< 1 9L 1 r71

n p L 1 1 L U , L . 7 l . L ...--- Shnet Revised by: up- ---

i --

1 Dcpt. or Agency: - Date:

I -1

f 0 I l ~ Pd0. 3 t ! ! ; .O l INTERNATI iF IA I . I)L;VI 1.01 h K N I I N T I I(NA1 IOr lh l 11,2!4K FOR I N 1 CI(NAT I (I.IAL I I N A l l i t 0 1 - 6 9 ) A!,:,OC.I P% I lo< i l L ( : U ~ ~ I f l l l ~ . l l(N A i l 0 [ ! I \'I l . O l ~ h ~ l ~ N l Ci l l ( l 'okAT 1 1 3 4 Al,!i!i<X I;

- . 1.

PRElNVESTMENr P K O G R h i - STUDY DATA SUPPLR.IEtIT Pa:(% ir No. : ,

( to bc filled in hlhen possible) - . - -- - -- - - - - -- - - . . . .- . . . . - . - - -. .

I. TCNTAT IVE S'TAFFING lyvc o f Sp rc id l i s t ) I iumlreronTcam I T t l l i ~ r - I I 1 . - A ---- - - _. . _

( a ) f o r e i g n Profc;sional S t a f f : r 1

I ( a ) I ~ ~ ! Profess ionr! S t a f f : Market i(esc~ncl~era, C ] ~ C : I ~ ~ ~ L C ! ~

hginoe~. : ; , Ecor!ol;!i.:; L:; I

say 1.2 I

180 ( c ) Local Support ing 6 t a f f : bltarvicwel':;, Zecr*t!t,aries,

~t~n'.i~~+~.(;~&=~~nl.!.:s-. -- ~~w-6 IF-2!! ~- ~-=: - 2. TENTATIVE SrUDY BUDGET (US$ equivalent )

- Foreign I Local I To ta l

Ctlrrency ! cur rcncy -- ( a ) Pro fess iona l S t a f f Costs

( b ) Equi pmtnt (~onrputer time) ( c ) Other (Trave l , non-prof. s t a f f , e tc . ):

(d) To ta l --- 390,000 I 280,OW 1 -- - -. - - - - - - - - - 570, C)CO p- - - - - - - - -- - .- - - . . - -. - -. - . . . -

t ?:A- x7.x

OTHER C0141.iC NTS say ouc i , t l k ) i ~

The s t u d y has heen desi,ped on t h c b:!sls of an indrrpcr ldent team who would cor!tr.a.I., 1 and work k-j.th t h e J . o c d peLrochcn~.ic;il developlr~cnt a ~ e n c i e s , but, hrould n o t cb-tail: any se1- t r j . c~~ from t..heii~. If the I.ocal pet,r.ocheraical conp.njcs wcro t o part;ic:j9ate n1ol.o a c t i v e l y i n t.hc study, i.t coti1.d c u t do~i11 on t h e f o r e i ~ m c o s t s m d I.oca1 out-of-poc1;ct expcl~scs. f!o~iever, the study ti.r?e ~:ov.ld be I.c:n~thencd :mci i.t x!oul.d -I - -~. Luse i r i i i c . i ~ of its i i i t i e j ~ ~ ~ i i c i n r ~ i ci~ar.tcr:tel-. (h t i ~ c : otiiex ilar~d, p:~r- i~.cipai icn of t i l e l o c n l a,?enzncj.es rroul.(l make t h e s t ~ j t l ! f rno1.e I1sal.eab:Le" t o t h e countries - and ~ { g l i t . even he !1~.m~!ded by t!~pm+

This i ssue uil.l havo t o bc resolvcd I n dj .scunsjons w<.t,h each country and \ii.th t h e RCD S e c r e t a r i a t e .

I P ~ . a - l ~ ~ ^ n + Dranare.A L.,. I r)",,",UIICII. I I L V O I ZY Y,. I I

Dept. or Agency: n-t,,. I " " .I.

-- - --- - - . . - . . . .

-- I Date:

conf!dential public disclosure authorized no. pi- 11...conf!dential report no. pi- 11 % be returned...

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