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Slovakia Petrochemicals Report 2012
Business Monitor International, Nov 2011, Pages: 39
Business Monitor International's Slovakia Petrochemicals Report provides industry professionals and strategists, corporate analysts, petrochemical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Slovakia's petrochemicals industry.
Slovakian chemicals and petrochemicals production performed strongly in 2011 as the country’s exportoriented industrial sector sustained growth, but an expected moderation in export markets in 2012 could knock the recovery off course, according to BMI’s latest Slovakia Petrochemicals Report.
In 2011, Slovakia’s petrochemicals capacities included 210,000 tonnes per annum (tpa) ethylene, 50,000tpa benzene, 40,000tpa ethylene oxide, 40,000tpa ethylene glycol, 180,000tpa low density polyethylene, 255,000tpa polypropylene and 65,000tpa xylenes. The industry is small by international standards and largely fulfils domestic demand. In H111, output of chemicals and chemical products grew 14.1% (year-on-year) y-o-y while production of rubber and plastic products rose 11.0% y-o-y. This marked a solid recovery to pre-recession levels of production, assisted by strong growth in the automotive sector both in Slovakia and in key export markets such as Germany and the Czech Republic.
Slovakia’s economy continued to strengthen in 2011 with growth estimated at 3.2%, driven by export performance with only a marginal recovery in household consumption. This provided the basis for strong chemical and plastic production growth. Export growth is expected to slump in 2012 and combined with a contraction in household consumption will lead to zero growth in Slovakia’s chemicals and petrochemicals industry. This may well prove to be an optimistic assessment. Fiscal austerity measures and moderating external demand will weigh on Slovak growth in 2012. With monetary policy tightening tempering demand for Slovak goods in Slovakia's key export markets, BMI expects that this trend will continue and forecast growth in overall industrial production to fall to 6.5% by end-2011 with a similar decline in chemicals and petrochemicals growth. The deterioration in the external environment was seen as early as Q211 when Slovakia’s leading refinery and petrochemicals producer Slovnaft indicated that its operating results had been affected by a moderation in external debate. Slovnaft reported that over H111 its results were positively supported by higher refinery processing and motor fuels sales and an improved refined product crack spread and due to the favourable EUR/US$ exchange rate development.
The domestic automotive industry will remain a key consumer of local petrochemicals, particularly PP which represents 60% of local polymer output, as well as imports of synthetic rubbers for tyre production. BMI’s Autos team is forecasting continued export-led growth in automotive production in 2012, but stressed that a double-dip recession in export markets could easily knock recovery off course.
It scores 56.4 points, up 0.2 points since last year due to an improvement in its country risk. This puts it 0.8 points behind Turkey and 0.6 points ahead of Romania. While Slovakia has a relatively small petrochemicals industry, the country’s infrastructure, improved regulatory environment and the potential for growth, particularly with rising demand from the automotive industry, makes the country an attractive destination for investors in the petrochemicals and plastics industry.
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