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Hungary Petrochemicals Report Q3 2011
Business Monitor International, May 2011, Pages: 56
Hungary Petrochemicals Report provides industry professionals and strategists, corporate analysts, petrochemical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Hungary's petrochemicals industry.
In 2010, Hungarian petrochemicals production showed modest growth, with a fall off in Q410 due to continuing lacklustre performance in the domestic market and low levels of activity in the eurozone, which is the country’s main export market. The outlook for Hungary’s petrochemicals sector weakened in 2010 with the economy growing by just 1.1% and poor export performance. Key petrochemicals consuming industries showed mixed performance with construction contracting yet further while the automotive industry started its recovery.
Olefins output was up 6% y-o-y to just under 2mn tonnes, although ethylene and propylene production grew just 1%. Total polymer output was 1.26mn tonnes, up 1% with PP static at 650,000 tonnes, HDPE up 8% to 400,000 tonnes and LDPE declining 6% to 210,000 tonnes. In 2010, within total polymer production the proportion of LDPE was 19%, HDPE was 37%, PP 44%, the proportion of HDPE increased. At the end of Q410 the closed inventory level of the polymers decreased by 20% compared with the end of previous quarter and 13% compared to the end of Q409.
MOL became increasingly reliant on the domestic market for petrochemicals sales in 2010, with its 6% growth to 1.42mn tonnes driven by a 20% rise in Hungarian sales, to 462,000 tonnes, which more than offset the fall in exports to the eurozone. The periodical maintenance works in the TVK olefins plant and the polymer plants in 2010 required less time than the similar reconstruction works in 2009, therefore the available capacity was higher in 2010. Record production was achieved by HDPE-2 unit in TVK with 223,000.
Growth will resume in 2011 with a broad-based economic recovery and GDP growth of 2.3% and construction and automotive sectors expanding at a higher rate than the overall economy and the industry benefitting from stronger export growth. Given that unemployment is still high, there is some way to go before consumer products return to normal levels, which means that demand from domestic plastics consuming manufacturing plants as well as packaging will remain below par until 2012 at the earliest. As such, these segments will be export-oriented in their approach to growth, exposing Hungarian plastics production to the trends in the eurozone and other principal export markets.
By 2010, Hungary had olefins production capacities of 660,000tpa ethylene and 400,000tpa propylene and polymer capacities of 400,000tpa HDPE, 210,000tpa LDPE, 650,000tpa PP and 440,000tpa PVC. In the fertiliser segment, Hungary had capacities of 380,000tpa ammonia and 195,000tpa urea. With no new investment planned, BMI does not anticipate any new petrochemicals plants coming onstream before 2015. There is no reason to expect MOL to enlarge its refining and petrochemicals capacities appreciably during the forecast period, as it will concentrate instead on maintaining its high level of operating efficiency and ability to meet EU fuel standards. Recent expansions in cracker capacity to 610,000tpa have helped reduce ethylene feedstock imports to virtually zero, with 90% of olefins output consumed within Hungary. Over the long term, the Hungarian petrochemical industry’s ability to expand its exports will likely be constrained by capacity.
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