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Romania Petrochemicals Report Q1 2013
Business Monitor International, November 2012, Pages: 60
BMI’s Romania petrochemicals report examines the fallout from the failed attempt to privatise local producer Oltchim in September 2012, and the outlook for the chemicals company as it seeks to overcome mounting losses, rising debts and a fall in competitively priced feedstock availability. We also look at the business environment, assessing growth potential in the context of a depressed export market and a slowdown in domestic growth due to austerity measures.
By 2012, Romania had modest olefins capacities of 200,000 tonnes per annum (tpa) ethylene and 100,000tpa propylene. Polyolefins capacities in 2011 were: 160,000tpa high density polyethylene
(HDPE); 160,000tpa low density polyethylene (LDPE); 80,000tpa polypropylene (PP); 60,000tpa polystyrene (PS); and 170,000tpa polyvinyl chloride (PVC). The structure of the industry, poor infrastructure and low capacities have long been barriers to growth and investment.
The monthly production index for chemicals and chemicals products fell 9.0% year-on-year (y-o-y) in the first seven months of 2012, while the rubber and plastic production index fell 12% y-o-y. This indicates that there has been a reversal in the gains that the Romanian petrochemicals industry made in 2011, when chemicals output grew 9% and rubber and plastics output grew 6%. The indications are that 2012 may be as bad as 2009, when the industry was hit by the effects of the international financial crisis of 2008.
However, the context is different. The market is affected by the fallout from the eurozone sovereign debt crisis, but there is a specific crisis within the Romanian petrochemicals sector – with Oltchim’s longstanding financial woes and the shortage of feedstock supply leading to depressed output across a range of segments. The restructuring and integration of the Romanian petrochemicals industry with local refinery capacity is seen as key to any revival. Until the situation is resolved, the country’s petrochemicals industry will operate below its full potential. Hopes rest on yet another attempt by the state to sell Oltchim in 2013, although this will come after a deadline set by the IMF as a condition of giving the country bail-out loans.
BMI has revised the following forecasts from Q412:
- BMI estimates that in 2012, chemicals output dropped by 7% and rubber and plastics output declined 12%.
- With output at a low, BMI believes that a further contraction is unlikely in 2013 and there is potential for growth in H213 – if only because of base effects. Output will still rise further if Oltchim finds a new owner and is integrated with the Arpechim refinery, which should help overcome obstacles to feedstock supply.
- Romania ranks seventh in BMI’s risk/reward ratings (RRRs) for the petrochemicals industry in Central and Eastern Europe (CEE), scoring 45.4 points out of 100, down 0.1 point since the previous quarter due to a slight decline in its country risk rating. This puts it 3.3 points behind Turkey and 3.9 points above Bulgaria.
BMI Industry View 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
Global Oil Products Price Outlook 13
Table: BMI's Refined Products Forecasts , 2010-2016 14
Table: Middle East Outperforms In Terms of Passenger Growth 18
European Petrochemicals Overview 23
Romania Market Overview 27
Industry Trends And Developments 29
Table: Refineries In Romania 31
Industry Forecast Scenario 32
Table: Romania’s Petrochemicals Indicators, 2010-2017 (’000 tpa, unless otherwise stated) 33
Petrochemicals Risk/Reward Ratings 35
Central and Eastern European Regional Power Risk/Reward Ratings 35
Table: Central and Eastern European Petrochemicals Risk/Reward Ratings (Scores Out Of 100) 37
Romania Petrochemicals Risk/Reward Ratings 37
Macroeconomic Outlook 39
Table: Romania – GDP By Expenditure, Real Growth %, 2008-2016 41
Company Profiles 42
Lukoil Romania 42
Country Snapshot 50
Table: Romania's Population By Age Group, 1990-2020 ('000) 51
Table: Romania's Population By Age Group, 1990-2020 (% of total) 52
Table: Romania's Key Population Ratios, 1990-2020 53
Table: Romania's Rural And Urban Population, 1990-2020 53
Glossary Of Terms 54
Table: Glossary Of Petrochemicals Terms 54
BMI Methodology 55
How We Generate Our Industry Forecasts 55
Chemicals And Petrochemicals Industry 55
Cross Checks 56
Business Environment Ratings 57
Table: Petrochemicals Business Environment Indicators And Rationale 58
Table: Weighting Of Indicators 59