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Recent Study: Czech Republic Petrochemicals Report Q3 2013

New Energy market report from Business Monitor International: "Czech Republic Petrochemicals Report Q3 2013"


Boston, MA -- (SBWIRE) -- 06/24/2013 -- The Czech petrochemicals market should benefit from the country's recovery from recession in 2013 despite weak growth of just 0.5%, according to BMI's forecasts. With the industry's key eurozone export markets experiencing a downturn, the persistent strength of the Czech koruna against the euro has militated against a recovery. However, BMI believes that any appreciation over the next few months is unlikely to be strong enough to threaten petrochemicals export growth.

Over the long term, the automotive industry will remain a key driver of demand for polymers in the Czech Republic. Growth in engineering plastics, particularly in the polypropylene (PP) segment, will be influenced by growth in the car industry. In terms of packaging and consumer goods industries, these will be more influenced by domestic consumer spending trends, which will remain bleak in 2013 due to little scope in household spending growth. Czech household consumption remains stubbornly weak as government austerity measures erode disposable income and keep unemployment persistently high. Therefore, polyethylene (PE) will remain reliant on export markets if output is to be sustained at 2012 levels.

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Over the last quarter, BMI has revised the following forecasts/views:

- The country's largest petrochemicals producer Unipetrol saw petrochemicals sales volumes rise 6% yearon- year in 2012 to 1.77mn tonnes. This was undermined by weaker polyolefins margins, although olefins margins improved as feedstock costs declined. In part, the company's financial stability improved as a result of restocking, but it is also undergoing restructuring ahead of an expansion in capacities that should secure its position as a market leader in the Central and Eastern Europe (CEE) region. In the olefins segment, ethylene was up 5.4% but propylene fell 2%. In polymers, high-density polyethylene (HDPE) grew 10.3% and PP rose 11.8%. While Czech Republic produced a surplus of PE in 2012, leading to net exports, the opposite was true of PP.
- The Czech petrochemicals industry is witnessing closures and consolidation, with the 20,000b/d Paramo refinery closed and urea production shut down by Unipetrol at the beginning of the year following years of losses, although a doubling of HDPE is expected from 2016.
- In BMI's CEE Petrochemicals Risk/Reward Ratings, the Czech Republic scores 58.8 points out of a maximum of 100, unchanged since the last quarter, with growth levels in line with BMI expectations. The country remains in third place, with Poland extending its lead over Czech Republic from 0.1 point to 0.6 points, while the gap between it and fourth-placed Hungary has lengthened from 0.4 points to 0.8 points. However, all three states have potential to shift places as a result of small changes to their risk scenarios.

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