Boston, MA -- (SBWIRE) -- 08/02/2012 -- The Czech Republic Petrochemicals Report examines the competitiveness and potential of the country's well-integrated petrochemicals sector, but warns that there will be a deterioration in the outlook for industry and that companies operating in the sector are likely to register weak margins over the coming year.
The report examines the strengths of the Czech petrochemicals sector and looks at its transformation into one of Central Europe's leading exporters of basic chemicals and polymers, as well as its position as a significant supplier of the domestic automotive and construction sectors. It also assesses the strategies being employed by petrochemicals producers to improve competitiveness and protect margins, and counter the effects of the downturn in the eurozone.
The Czech industry is facing stagnation with the risks firmly to the downside in 2012 after weak margins and low demand damaged the performance of the Czech petrochemicals industry in 2011. Refining capacity was temporarily taken offline by the country's largest producer, Unipetrol. As a result of this suspension, the company's ethylene output declined 10.3% year-on-year (y-o-y) to 148,000 tonnes in 2011, benzene declined 4.7% to 201,000 tonnes and propylene fell 17.6% to 42,000 tonnes. In terms of polymers, polypropylene (PP) production was worst hit by the outages, falling 12.0%, while polyethylene declined 9.0%.
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In this adverse economic environment, BMI does not anticipate a significant rise in petrochemicals capacity over the medium term. The market will be dominated by basic chemicals, despite efforts towards diversification. Furthermore, the raw materials base is weak, and practically all primary and secondary raw materials have to be imported, placing the industry in a vulnerable position. Consequently, The Czech petrochemicals sector will struggle to compete with the massive new capacities in the Middle East.
Over the last quarter BMI has revised the following forecasts/views:
- BMI has downwardly revised its forecast for petrochemicals output growth to zero in 2012, in light of weak external performance, particularly in Germany.
- BMI anticipates a drop in demand from local industry, which also relies on export markets.
- Despite flagging performance, Unipetrol is managing to protect and boost olefins and polyolefins margins, although BMI does not expect any further improvement in the short-term
- In BMI's Petrochemicals Risk Reward Ratings (RRRs) for Central and Eastern Europe (CEE), the Czech Republic scores 58.1 points out of a maximum of 100, unchanged since the previous quarter. Facing stagnation, the country has slipped from second to third place in the regional petrochemicals ratings, placing it behind Poland but ahead of Hungary.
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