"Hungary Petrochemicals Report Q3 2016" now available at Fast Market Research

The Hungarian petrochemicals industry is witnessing strong growth, supported by additional capacity and rising demand from domestic industries. The automotive industry dominates the sector's end-market, absorbing the supply of polymers and rubbers. While automotive output growth is set to slow, it will still report a forecast 8.1% growth in 2016, giving a strong basis for continued petrochemicals output growth.

In 2015, Hungary had olefins production capacities of 660,000 tonnes per annum (tpa) ethylene and 400,000tpa propylene. It is also estimated to have polymer capacities of 400,000tpa high density polyethylene (HDPE), 210,000tpa low density polyethylene (LDPE), 650,000tpa polypropylene (PP) and 440,000tpa polyvinyl chloride.

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Following a disappointing 2014, Hungary's rubber and plastic output grew by around 15% y-o-y in 2015, while chemicals output rose 2.3%. MOL reported that its production, most of which originated in Hungary, saw ethylene grew 12.4% y-o-y to 737,000 tonnes, while propylene rose 15.7% to 378,000 tonnes. In polymers, LDPE grew by 17.0% to 177,000 tonnes, HDPE rose 11.7% to 390,000 tonnes and PP rose by 20.6% to 534,000 tonnes. Additionally, the start-up of a new 130,000tpa butadiene unit in Q415 saw output of 39,000 tonnes of butadiene. Growth in butadiene output will help secure feedstock supplies for synthetic rubber used in the country's growing automotive industry.

There is a modest upside to the performance of the Hungarian petrochemicals sector in 2016 with the addition of new 130,000tpa butadiene capacity in Q415 and a supportive economic environment, although growth will moderate. While the increase in butadiene output will serve as feedstock for a new 60,000tpa styrene butadiene rubber plant, due to open in 2017, there is a danger of oversupply in a European market that is already seeing surplus butadiene drive down prices.

There is a modest upside to the performance of the Hungarian petrochemicals sector in 2016, with the addition of new 130,000tpa butadiene capacity in Q415 and a supportive economic environment, although growth will moderate. While the increase in butadiene output will serve as feedstock for a new 60,000tpa styrene butadiene rubber plant, due to open in 2017, there is a danger of oversupply in a European market that is already seeing surplus butadiene drive down prices.

In BMI's Europe Petrochemicals Risk/Reward Index, Hungary's score has risen 0.3 points to 58.9 on the back of positive trends in production. There is no reason to expect Hungarian petrochemicals producers to enlarge refining and polymer capacities appreciably during the forecast period, although there will be growth in the isocyanates and butadiene segments.

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