Report Published: "Bulgaria Petrochemicals Report 2014"

From: Fast Market Research, Inc.
Published: Mon Dec 02 2013

The short-term outlook for the Bulgarian petrochemicals industry will depend on the performance of external markets with Germany likely to be crucial to growth. However, in the long-term, local manufacturing - particularly the growing automotive industry - will be the key driver of growth.

In 2013, Bulgaria had olefins capacities of 300,000 tonnes per annum (tpa) ethylene, 80,000tpa propylene and 50,000tpa butadiene. In terms of aromatics and intermediates, it had capacities of 35,000tpa benzene, 40,000tpa styrene and 35,000tpa paraxylene. It also had capacities of 120,000tpa low-density polyethylene (LDPE), 80,000tpa polypropylene (PP), 70,000tpa polystyrene (PS) and 35,000tpa styrene butadiene rubber. The average index for chemicals and chemical products manufacturing fell 6.6% y-o-y in the January-August period of 2013 following a fall of 9.2% growth in 2012, while the index for rubber and plastic grew 8.3% following 0.5% growth in the previous year. The difference can be explained by the decline in basic chemicals as a result of a reduction in national cracker capacity from 450,000tpa to 300,000tpa, while plastics and rubber have remained buoyant having already gone through a period of consolidation and rationalisation.

Full Report Details at

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

* Lukoil has undertaken a considerable redevelopment programme at the Neftochim refinery, investing over US$1bn from early the 2000s. The latest improvement expected at the facility is the addition of an ultra-modern complex for the deep processing of vacuum residue.
* There is little expectation of investment in petrochemicals capacity expansion over the medium-term, especially in the current economic downturn. With almost all the country's feedstock derived from naphtha, the refinery is crucial to maintaining downstream operations, but this makes the industry highly vulnerable to oil price fluctuations.
* In terms of domestic consumption, Bulgaria is set to see a thriving market for rubber and plastics for the automotive industry, which has recently seen the opening of a relatively modest Chinese car plant and the prospect of further additions. As manufacturers continue to invest in Bulgaria, we expect to see continued investment across the automotive supply chain. Declining vehicle output in the key markets of Germany and Italy has put a crimp on demand for Bulgarian parts, but BMI believes that the long-term prospects are good, supported by the country's competitive advantages in cost, taxation and location.
* Bulgaria comes 15th out of 16 markets in BMI's Risk/Reward Ratings (RRRs) for Europe, 0.3 points behind Ukraine and 6.4 points ahead of Azerbaijan with 41.7 points. Ukraine has overtaken it in the rankings owing to the resumption in production at its poly vinyl chloride (PVC) facilities, while Bulgaria has suffered since one of two crackers was mothballed and remains offline indefinitely.

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