2013-03-01 16:42:03 - Recently published research from Business Monitor International, "Poland Petrochemicals Report Q2 2013", is now available at Fast Market Research
BMI View: Poland is working towards the completion of a major restructuring programme, which has created a new EU chemicals major - Grupa Azoty - out of the smaller state-owned chemicals producers that the government had previously failed to privatise. This leading players in the Polish petrochemicals sector are adopting growth and risk management strategies as they seek to maximise the tremendous growth opportunities that are inherent in the regional market, while also dealing with increased competition from the Middle East and the United States.
The mergers and consolidation process started over 2012, after the government failed to sell off individual chemical units, and will be completed in 2013. The streamlined and larger assets will be easier to privatise and the
government hopes they will generate more revenue than indicated by the poor bids received in 2011. Following the completion of the consolidation, both Grupa Azoty (created from a number of smaller chemical companies) and Europe's second largest soda ash producer, Ciech, which has begun a restructuring drive that will see it scrap its loss-making Zachem TDI business early in 2013, will be put up for sale.
Full Report Details at
- www.fastmr.com/prod/541263_poland_petrochemicals_report_q2_2013. ..
In the domestic market, demand from the consumer goods and packaging industries is likely to be muted until 2014, with continued downward pressure on wages, government cuts, high unemployment, strained household budgets and limited lending all taking a toll. This sector is vital to the petrochemicals industry because it is an important consumer of plastic products such as polyethylene (PE) and polyethylene terephthalate (PET). So far, consumer spending has not suffered as severely as we initially expected, but the prolonged slowdown is likely to erode margins at Basell Orlen Polyolefins (BOP)'s 400,000 tonnes per annum (tpa) polypropylene (PP) production facility. As such, the domestic market will provide little in terms of sales growth for domestic polymers producers.
The construction sector will be one of the slowest growing segments for petrochemicals, hitting polyvinyl chloride (PVC) production hard. The artificial demand created by the hosting of the UEFA football championship, which spurred construction, has also abated. The slowdown in eurozone markets will have a knock-on effect on a supply chain that depends on export-oriented industries such as the autos sector, a major consumer of engineering PP and polyurethane products.
Over the last quarter, BMI has revised the following forecasts/views:
* In spite of the effects of the eurozone crisis, the Polish petrochemicals industry continues to draw investment and expansion is planned. Zaklady Chemiczne Police (ZChP) is debottlenecking its two 250,000tpa installations, increasing capacity by around 25,000tpa.
* We continue to consider Poland's macroeconomic trajectory among the most solid in Europe - with a recovery in GDP growth likely to be led by a strengthening export performance. However, with 55% of its exports bound for the eurozone, Polish manufacturing depends on performance in EU markets.
* PKN Orlen's strategy for 2013-17 may be insufficient to meet the challenges posed by US and Middle Eastern producers, particularly at its Czech subsidiary Unipetrol lacks access to indigenous energy resources and is burdened by its aging assets.
* Poland's score is unchanged at 58.9 out of 100 this quarter, up 0.2 points due to an improvement in its risk score. This puts it just 0.1 point ahead of the Czech Republic and 6.8 points behind Russia in our Central and Eastern Europe (CEE) Risk/Reward Ratings (RRRs). Petrochemicals-specific scores are likely to remain unchanged, with BMI doubtful that major capacity additions will be made over the medium term. Poland's score has been boosted by recent consolidation and streamlining, which should make the industry more competitive.
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