Market Report, "Hungary Petrochemicals Report Q1 2015", published

Growth in the Hungarian automotive industry is likely to support petrochemicals production, but the weakening domestic environment gives cause for concern particularly in relation to the crucial construction sector, according to BMI's latest Hungary Petrochemicals Report.

Government statistics reported strong growth in rubber and plastics, which rose 9.2% year-on-year (y-o-y) in the first eight months of 2014, although this was lower than total manufacturing output growth of 10.5% y-o-y. However, the country's largest polymer producer MOL reported a 1.5% fall in petrochemicals output to 722,000 tonnes with ethylene down and polymer segments noting a sharp fall, mitigated only by strong growth of low-density polyethylene (LDPE) due to base effects caused by the temporary shut-down of an LDPE plant in 2013. As such, plastics and rubber growth is likely to have come from other more niche producers.

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MOL is pressing ahead with the completion of a new 130,000tpa butadiene plant, which is scheduled to begin operations in Q215. As well as absorbing the local naphtha surplus, growth in butadiene output will help secure feedstock supplies for synthetic rubber used in the country's growing automotive industry. At the same time, Borsodchem could add value to hydrochloric acid by-products at its isocyanates plant with a new hydrochloric acid condensation plant potentially leading to an increase in chlorine feedstock for its PVC chain.

* BMI anticipates that in 2015, Hungary will continue to have olefins production capacities of 660,000tpa ethylene and 400,000tpa propylene. It is also forecast to have polymer capacities of 400,000tpa HDPE, 210,000tpa LDPE, 650,000tpa PP and 440,000tpa PVC. In the fertiliser segment, Hungary is forecast to have capacities of 380,000tpa ammonia and 195,000tpa urea. Over the long term, the Hungarian petrochemical industry's ability to grow its exports will be constrained by capacity.
* On the refining side, we forecast steady production of...

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