"Czech Republic Petrochemicals Report Q2 2016" Published

Czech polymers production appears to be unaffected by the shutdown of Unipetrol's cracker in August 2015 due to a fire, which will keep it out of operation until July 2016. The growth in margins on polyolefins at Unipetrol is an indication that the Czech Republic's market environment has improved. Export markets will be key to growth, with the German market remaining pivotal for the export of the country's manufactured products, particularly vehicles, which absorb the bulk of Czech petrochemicals production

In 2015, Czech chemicals output growth declined 4.5% y-o-y, and rubber and plastics rose by 9% y-o-y. Low naphtha costs have improved the competitiveness of the sector and boosted polyolefins margins, while higher sales volumes - particularly in the polypropylene segment - have been led by a manufacturing surge. Export-led industries have stimulated petrochemicals consumption, helping to raise cracker capacity utilisation to 89% before the cracker closure; capacity utilisation declined to 72% from August.

Full Report Details at
- http://www.fastmr.com/prod/1123421_czech_republic_petrochemicals.aspx?afid=301

The manufacturing and automobile sectors will continue to benefit from recovering eurozone demand and rising consumer confidence domestically. Domestic demand for petrochemicals used in export-oriented industries, particularly the automotive sector, will have a major influence on the Czech petrochemicals sector. We project Czech car production growth to reach 6.8% in 2016 as car sales in the European Union - the Czech auto industry's main export destination - to increase 3.6% growth. We forecast car production for export to also continue growing past 2016 with annual growth averaging 7.4% over the 2017 to 2019 period, thereby stimulating growth in high performance engineering plastics and synthetic rubbers.

Unipetrol's 2013-2017 five-year strategy for petrochemical modernisation projects includes a new polyethylene (PE) plant and increasing the utilisation of its 545,000 tonnes per annum (tpa) cracker by 13% with a new PE installation, a dicyclopentadiene plant and polypropylene debottlenecking. BMI believes completion is likely in 2018, revised from our previous estimate of 2016, when total PE capacity should reach 500,000tpa.

Unipetrol is also planning the closure of its 350,000tpa ammonia plant in Litvinov due to a lack of competitiveness and an increasingly limited market.

In BMI's European Petrochemicals Risk/Reward Index, the Czech Republic scores 58.9 points out of a maximum of 100, up 0.5 points due to an improvement in its Country Risk score caused by positive market trends. It retains its 10th position, which it has held for the past year. It lies 0.2 points behind Russia and Poland and 0.3 points ahead of Hungary.

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