Iran struggles to buy SEA palm oil as sanctions bite

Friday March 16, 2012

KUALA LUMPUR: Iran has not managed to buy palm oil from South-East Asia despite paying for some backdated orders with other currencies apart from the US dollar as Western sanctions bite, traders said.

Palm oil, used for cooking, has grown increasingly difficult for Iran to secure as the United States and Europe impose tough financial sanctions to stop its nuclear weapons programme.
Middle East and South-East Asian traders said that Iranians had been offering US$20 to US$30 per tonne more for palm oil from top producers Indonesia and Malaysia, but no deals had been signed in the past month though food was not included under sanctions.
In early January, South-East Asian traders told Reuters that Indonesia and Malaysia had stopped exporting directly to Iran over payment problems since late last year.
“Nothing new has been signed. There were some Iranians at a palm oil conference in Kuala Lumpur last week looking to make deals but nothing came out of that,” said an official with a Saudi food company with an edible oil refinery in Iran.
“It is difficult for us to run our own refinery. Freight costs are high and many of the companies in Iran are still waiting for a backlog of shipments to come through. These are deals made much earlier but the payment issues block this.”
In February, cargo surveyor Societe Generale de Surveillance (SGS) reported that 27,100 tonnes of refined palm oil were exported to Iran, which traders said was a clearing off a backlog of orders made last year.
But in the first 10 days of March, no other Malaysian shipments to Iran were reported, data from SGS showed.
“There are no more direct deals with Iran. Some parties have been paid, mostly in the form of euros or yen,” said a trader with a Malaysian palm oil firm that used to deal with Iran. “I don't think they will use the euro route since it is still hard to process payment and banks are getting very wary.” - Reuters
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