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Czech Republic Petrochemicals Report Q1 2013
Business Monitor International, November 2012, Pages: 52
This Czech Republic Petrochemicals Report examines the potential of the country’s integrated petrochemicals sector and the competitive dynamics at play in the domestic market. However, BMI warns that there will be a deterioration in the outlook for industry and that companies operating in the sector are likely to register weak margins over 2013.
The report also assesses the strengths of the Czech petrochemicals sector and looks at the country’s transformation into one of Central Europe’s leading exporters of basic chemicals and polymers, as well as its position as a significant supplier of the domestic automotive and construction sectors. It also assesses the strategies being employed by petrochemicals producers to improve competitiveness and protect margins, and counter the effects of the downturn in the eurozone.
The chemicals and downstream industrial sectors registered a rapid slowdown in 2012 as exports were hit by the economic crisis in the eurozone. Petrochemicals margins have been volatile, with the rise in oil prices feeding through the value chain and eroding the profitability of polyolefins. Production and sales of chemicals, rubber and plastic fell throughout 2012 while unfavourable economics have prompted the country’s largest petrochemicals producer Unipetrol to cut refining and urea capacity. Despite falling polyethylene (PE) sales, Unipetrol is planning to double its high density PE (HDPE) capacity at its Litvínov site, with operations due to start in Q216.
Over the last quarter, BMI has revised the following forecasts/views:
- The competitiveness of the Czech petrochemicals industry will depend on exchange rate differentials. On the upside, we expect the Czech koruna to come under pressure in the near term, with Czech exposure to the eurozone likely to reduce the value of the koruna to the euro.
- Due to cuts in refinery capacity there is the potential for increased reliance on imported ethane and propylene.
- Over the long term, the automotive industry will remain a key driver of demand for polymers in the Czech Republic. The packaging and consumer goods industries are likely to follow the same pattern, although meeting domestic demand is likely to offer better opportunities than exporting products abroad.
- In BMI’s Petrochemicals Risk/Reward Ratings (RRRs) for CEE, the Czech Republic scores 58.7 points out of a maximum of 100, unchanged from the previous quarter. It now shares second place in the rankings with Poland, which has seen an improvement in country risk ratings over the past quarter. The Czech Republic’s score has improved as a result of plans for PE capacity expansion. However, the export-oriented nature of the country’s manufacturing sector means that the petrochemicals industry is heavily exposed to external risk and the country is in danger of slipping to third place.
Executive Summary 5
SWOT Analysis 7
Czech Republic Petrochemicals Industry SWOT 7
Czech Republic Political SWOT 7
Czech Republic Economic SWOT 8
Czech Republic 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
Czech Republic Market Overview 27
Industry Trends and Developments 29
Petrochemicals Risk/Reward Ratings 30
Central and Eastern European Regional Power Risk/Reward Ratings 30
Table: Central and Eastern European Petrochemicals Risk/Reward Ratings (Scores Out Of 100) 32
Czech Republic Risk/Reward Ratings 32
Industry Forecast Scenario 33
Table: Czech Republic Petrochemicals Data And Forecasts, 2010-2017 (‘000tpa, unless otherwise stated) 35
Macroeconomic Outlook 36
Table: Czech Republic – Economic Activity, 2011-2016 38
Company Profiles 39
Country Snapshot 42
Table: The Czech Republic’s Population By Age Group, 1990-2020 (‘000) 43
Table: The Czech Republic’s Population By Age Group, 1990-2020 (% of total) 44
Table: The Czech Republic’s Key Population Ratios, 1990-2020 45
Table: The Czech Republic’s Rural And Urban Population, 1990-2020 45
Glossary Of Terms 46
Table: Glossary Of Petrochemicals Terms 46
BMI Methodology 47
How We Generate Our Industry Forecasts 47
Chemicals And Petrochemicals Industry 47
Cross Checks 48
Business Environment Ratings 49
Table: Petrochemicals Business Environment Indicators And Rationale 50
Table: Weighting Of Indicators 51