Why did the feed rate of petrochemicals increase?/ The government’s new game with the stock market! – Tejarat News

According to Tejarat News, it was on the 17th of May that the total index of the Tehran Stock Exchange, with a 3.7 percent drop, entered a downward path that has not yet ended. By the end of the same week, the total stock market index had fallen by more than 10%. Since then, the total index has collapsed by more than 380,000 units and recorded a 15% retreat.

The fall on the 17th of May surprised the people of the market. Especially since until then the stock market was on an upward path and had given the shareholders a good return. At the same time, most of the analyzes pointed out that due to the uniform and continuous growth of the stock market since the beginning of the year, the market needed to be corrected. An analysis that was of course not wrong and was compatible with the principles of the stock market.

But now the shareholders have been informed that on the 17th of May 1402, the government has put a wide hat on their heads. The letter that is circulating these days and indicates the increase in the feed rate of petrochemicals from five to seven thousand tomans, is actually a resolution that was passed by the cabinet on the same date and has the signature of Mohammad Mokhbar, the first vice president.

Perhaps the coincidence of this resolution with the natural period of market reform was the government’s smart timing to cover up the dangerous decision it has made for petrochemicals!

Emptying the share with informational rent

This resolution has now revealed several issues for investors. On the one hand, it is clear that despite expert meetings and lobbying by petrochemical industry and capital market activists to determine a fair price for feed, the economic ministries of the 13th government, in collusion with each other, have drawn a sinister plan to undermine the profits of petrochemical companies and the interests of its shareholders, and on the other hand, It has become clear that access to confidential information continues in the Iranian capital market!

In this particular case, the informational rent pushed the few legal and maybe real shareholders ahead of others to sell their petrochemical shares at a higher price and empty the shares. In this way, the stock market faced the dominoes of stock sales, and the fear of repeating the disaster of 1999 resulted in the outflow of four thousand billion tomans of real money.

The wide hat of the government on the shareholders

The loose hat that the government placed on the shareholders of the capital market, on the one hand, destroyed the restored confidence in the market, and on the other hand, it was the narrator of the tampering with the profits of these companies and the dagger that the government brought to the foreign exchange companies. The products of petrochemical companies supply 40% of the country’s non-oil exports and have the largest share of the country’s foreign currency supply.

At the same time, the government is focusing on petrochemicals to cover its budget deficit and to compensate for the gap in the targeting of subsidies. Get your hands on it, the government has already come out of the gas feed and is busy threatening the profitability of these companies and the interests of their shareholders-investors.

According to the budget bill of 1402, a part of the resources needed for targeting the subsidies was supposed to be provided from the sale of gas feed to petrochemicals. At the same time, the central bank has announced that it will calculate the feed price of petrochemicals based on the dollar price of 28,500 tomans. On the other side of the story, we should pay attention to the hub price, assuming 15 cents, the price of petrochemical gas feed is estimated to be around 4200 tomans, which is lower than the current five thousand tomans and far from the price of seven thousand tomans.

Although it seemed that this paragraph was removed from the budget bill and the government sent it to the archive, it seems that the government still did not abandon this policy; As the calculations of the Majlis Research Center show, for every 1000 tomans reduction in the price of petrochemical feed compared to the ceiling of 7 thousand tomans, the targeted sources of subsidies face a decrease of 37 thousand billion tomans. Based on this, it is clear why the government has increased the price of feed in an immature decision!

The government’s insistence on currency suppression policy

On the other side of the story, the government’s insistence on fixing the Nimei exchange rate at the price of 28,500 Tomans is noteworthy. Accordingly, if the government is going to keep the same price for the semi-fixed rate, the targeted sources of subsidies will face a deficit of 148 thousand tomans. Based on this, the government should choose to either keep the currency price stable and increase the feed price or be satisfied to end the currency suppression policy and keep the feed price at an equilibrium rate so as to cause less damage to petrochemical companies.

However, based on the mentioned letter and the statements of the officials of the economic ministries, it seems that the government has taken the easier and populist way of stabilizing the exchange rate and has put its knife in the throat of petrochemical companies. Meanwhile, threatening foreign exchange companies under the pretext of controlling the dollar rate means postponing the problem; Because the decrease in income and profit of these companies means a decrease in foreign currency entering the country and will eventually lead to a lack of foreign exchange resources!

Will the government back down?

Today, Ebrahim Raisi has played the role of a demander and announced that he will pursue this resolution through legal channels. It is as if the head of the 13th government was not present at the cabinet meeting and was not in the process of approving the price increase!

In the meantime, while the stock exchange organization has remained silent against this government’s action, the Center of Investment Institutions of Iran, which represents 600 financial and investment institutions in Iran, in a letter addressed to the first vice president, emphasized the need for predictability of the economy to attract investment. Referring to the decrease in the profit of the petrochemical industry and even the loss of some gas feed petrochemicals (methanol and urea), he pointed out the financial situation of petrochemicals.

This institution has suggested that the recent resolution of cancellation and the status of the feed rate should be returned to the previous state and any new decision should be re-examined in a joint working group of industry experts and stakeholders and the necessary proposals should be presented for approval!

Now the question is whether the government will withdraw from its risk-creating decision or is it going to turn on the same heel and currency-generating industries will fall victim to the government’s immature policies one by one? It should be noted that some petrochemical companies have announced that the new rate has not yet been communicated to them by publishing a notice in the Kodal system.

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