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Romania Petrochemicals Report Q3 2012
Business Monitor International, May 2012, Pages: 59
The Romania Petrochemicals Report provides industry professionals and strategists, corporate analysts, petrochemical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Romania's petrochemicals industry.
BMI’s Romania Petrochemicals Report examines the impact of the planned privatisation of local producer Oltchim on the domestic industry. Furthermore, we also look at how – if successful – such a move would allow Romania to overcome the feedstock issues that have crippled production over the past two years.
In an effort to cut costs, Oltchim reduced its output to just 30% of nameplate capacity in H211 after it found itself unable to finance its working capital. The resumption of operations at its 56,000 tonnes per annum (tpa) propylene production facility in June 2011 will boost local polypropylene (PP) production, although this represents only a small portion of Romanian petrochemicals output. Ultimately, the fate of the sector will rest on the privatisation of Oltchim and its integration into the Arpechim refinery as part of the Romanian government’s deal with the IMF.
Petrom’s decision to close the Arpechim refinery in March 2011 has had a deleterious impact on downstream operations. Much of the country’s petrochemicals production is dependent on the refinery, which suffers due to complex logistical issues – namely there is no seaport access for imported oil – meaning the facility is not commercially viable, at least as a stand-alone operation. The closure of the refinery has cut off naphtha feedstock supply to the 200,000tpa cracker that Oltchim acquired from Petrom in early 2010. Until the situation is resolved, the country’s petrochemicals industry will operate below its full potential, although this will be partly outweighed by growth in production at Rompetrol’s high density polyethylene (HDPE) plant in Navodari.
Over the previous quarter BMI has revised the following forecasts:
- BMI estimates that production of chemicals and chemical products grew 9% year-on-year (y-oy) in 2011, while rubber and plastics production grew 6%. However, output declined towards the end of the year. In Q411, BMI estimates that chemicals output fell 8% y-o-y, while rubber and plastics output declined 4% y-o-y.
- The deteriorating outlook for Romanian exports – due to the downturn in the eurozone – will depress domestic petrochemicals consumption over 2012, despite supportive domestic demand.
- Output will still rise if Oltchim finds a new owner and is again integrated with the Arpechim refinery, which should help overcome problems in accessing feedstock supply.
- Romania ranks seventh in BMI’s CEE Risk/Reward Ratings (RRRs) for the Petrochemicals industry, scoring 45.1 points out of 100 – unchanged since the previous quarter. This puts it 1.3 points behind Slovakia and 4.2 points above Ukraine. Successful privatisation of Oltchim and its planned integration with the Arpechim refinery would significantly improve the country’s market risks scores, potentially enabling Romania to rise up the rankings to take sixth place.
Executive Summary 5
SWOT Analysis 7
Romania Petrochemicals Industry SWOT 7
Romania Political SWOT 7
Romania Economic SWOT 8
Romania Business Environment SWOT 8
Global Petrochemicals Overview 9
Petrochemicals Market Overview 9
Table: World Ethylene Production By Country, 2011 And 2016 (‘000 tonnes capacity) 9
Financial Results 13
Table: Financial Results Of Major Petrochemicals Companies, 2011 13
Global Oil Products Price Outlook 14
Table: BMI's Refined Products Forecasts, 2010-2016 14
European Petrochemicals Overview 23
Romania Market Overview 28
Industry Trends And Developments 30
Table: Refineries In Romania 31
Petrochemicals Risk/Reward Ratings 32
Romania Petrochemicals Risk/Reward Ratings 32
Table: Central And Eastern Europe Petrochemicals Risk/Reward Ratings 32
Industry Forecast Scenario 35
Table: Romania’s Petrochemicals Indicators, 2009-2016 (’000tpa unless otherwise stated) 37
Macroeconomic Outlook 38
Table: Romania – Economic Activity, 2011-2016 40
Company Profiles 41
Lukoil Romania 41
Glossary Of Terms 49
Table: Glossary Of Petrochemicals Terms 49
BMI Methodology 50
How We Generate Our Industry Forecasts 50
Chemicals And Petrochemicals Industry 50
Cross Checks 51
Business Environment Ratings 52
Table: Petrochemicals Business Environment Indicators And Rationale 53
Table: Weighting Of Indicators 54
Country Snapshot: Romania Demographic Data 55
Section 1: Population 55
Section 2: Education And Healthcare 56
Table: Vital Statistics, 2005-2030 56
Section 3: Labour Market And Spending Power 57
Table: Employment Indicators, 2001-2006 57
Table: Consumer Expenditure, 2005-2010 (US$) 58
Table: Average Annual Wages, 2006-2010 58
Lukoil Romania , Oltchim , Petrom , Rompetrol ,