Poland Petrochemicals Industry Update Quarter 1 2012

  • November 2013
  • -
  • Business Monitor International
  • -
  • 97 pages

The Polish petrochemicals market has managed to ride-out the volatility in export industry s with healthy domestic demand, but this will be tested in 2012 when key export-oriented markets, particularly the automotive segment, will experience headwinds as the eurozone crisis deepens, according to BMI’s latest Poland Petrochemicals Report.
Poland has enjoyed one of the most compelling domestic demand stories in Europe and positive growth dynamics at home have so far seen the country ride-out the current weakness in the eurozone. The strong external industry helped buttress growth in the petrochemicals market in 2011; however, there are now downside risks to our growth expectations. The eurozone’s ongoing sovereign debt problems mean that global growth is entering a soft patch with recession a real possibility in 2012. Poland is unlikely to be fully spared the effects of any regional or global contraction in growth and this will have a significant impact on the domestic petrochemicals industry . Growth in industrial production, which is heavily correlated with the country's export performance, was already starting to lose momentum in Q311.
The slowdown in eurozone industry s will have a significant impact on a supply chain that depends on export-oriented markets such as the automotive segment, a major consumer of PP and polyurethane products. Despite the slight decline in automotive output in 2010, BMI believes that Poland is fairly well placed to achieve production growth and we expect the country to be producing more than 1mn units a year as early as 2013. Nevertheless, the slowdown in the eurozone poses a significant downside risk.
Crude prices will also pose a risk with any rise as a result of industry uncertainty likely to raise naphtha feedstock prices and erode margins for basic chemicals. BMI believes that Polish producers will find it increasingly difficult to pass on cost increases to customers, particularly when ethane-based production elsewhere will enjoy higher margins.
Demand from consumer goods and packaging markets will pick up as household demand remains firm amid improved domestic liquidity conditions. This segment is vital to the petrochemicals market because it is an important consumer of plastic products such as PE and PET. So far, consumer spending has not suffered as severely as we initially expected. While consumer spending had started to wind down from mid-2010, still-buoyant domestic lending has prevented an outright collapse in expenditure and consumer sentiment, which should help offset the problems in the automotive segment . This should help PE margins at Basell Orlen Polyolefins (BOP)’s 400,000tpa PP production facility.
PTA producers have seen significant demand from downstream PET producers as the weakness of the euro against the US dollar has made imported feedstock less favourable. Following the completion of its 600,000 tonnes per year (tpa) PTA plant, Polish petrochemicals producer PKN Orlen is banking on capturing some of the Western European PTA industry as well as the Polish PTA industry, which is growing at a rate of 8-10% per year . The success of PKN Orlen’s 600,000tpa PTA complex, which was operating at full capacity in H211, has prompted the firm to consider investment in downstream PET production. This move would grow its value chain and signal further diversification in the Polish petrochemicals market .

Table Of Contents

Executive Summary . 5
Industry SWOT Analysis 7
Poland Political Environment and Risk Analysis .. 7
Poland Economic Environment and Risk Analysis 7
Poland Business Environment SWOT . 8
World Petrochemicals Overview . 9
Petrochemicals Industry Overview . 9
Data : World Ethylene Production By Country, 2011 And 2015 (’000 tonnes capacity) 9
Financial Results 13
Data : Financial Results Of Major Petrochemicals Firms, 2010 . 13
World Oil Products Price Outlook Q1 2012 14
European Petrochemicals Overview 17
Poland Industry Overview . 22
Data : Poland’s Cracker Capacity, from 2009 to 2015 (‘000tpa) .. 23
Industry Trends And Developments 24
Upstream Activities 25
PKN Strategy, from 2009 to 2013 .. 27
Lotos Privatisation . 27

Environment Overview 29
Petrochemicals Business Environment Ratings .. 29
Data : Central And Eastern Europe Petrochemicals Business Environment Ratings 29
Poland’s Business Environment .. 31
Overview . 31
Legal Framework 31
Foreign Investment Policy . 32
Foreign Trade Regime . 33

Industry Projection Scenario 34
Market outlook . 34
Production . 35
Data : Polish Petrochemicals Segment : Historical Data and Projections .. 36

Macroeconomic Data . 37
Data : Poland - Economic Activity 39
Company Profiles 40
Anwil . 40
JandS Energy 41
Polski Koncern Naftowy Orlen 42
Grupa Lotos .. 45
Glossary Of Terms . 49
Data : Glossary Of Petrochemicals Terms 49
BMI Methodology 50
How We Generate Our Market Projections 50
Chemicals And Petrochemicals Market 50
Cross Checks 51

Environment Overview Ratings . 52
Data : Petrochemicals Business Environment Indicators And Rationale . 52
Weighting 53
Data : Weighting Of Indicators .. 53

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