"Romania Petrochemicals Report Q2 2013" Published

New Energy research report from Business Monitor International is now available from Fast Market Research

by Bill Thompson

(WireNews+Co) - Boston, MA - 20 March 2013

BMI View: There is currently a great deal of uncertainty surrounding the future of Romanian petrochemicals producer Oltchim following the decision to file for insolvency in January 2013 after an attempt to privatise the firm failed. Nevertheless, the relatively strong domestic market is registering growth in the consumption of petrochemicals - particularly in the construction and automotive sectors - and with domestic production at low levels due to structural and financial problems within the industry, Romania appears to be one of the few European markets with the potential for import growth.

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.

View Full Report Details and Table of Contents (http://www.fastmr.com/prod/552385_romania_petrochemicals_report_q2_2013.aspx?afid=201) (http://www.fastmr.com/prod/552385_romania_petrochemicals_report_q2_2013.aspx?afid=201)

The monthly production index for chemicals and chemicals products fell by an average of 5.0% year-onyear (y-o-y) in the first 10 months of 2012, while the rubber and plastic production index fell 11.5% y-o-y. This was a reversal on the gains registered by the Romanian petrochemicals industry in 2011, when chemicals output grew 9% and rubber and plastic grew 6%. The situation in the chemicals industry was not as bad as the 7% contraction BMI forecast in the previous quarterly report, in part due to a partial resumption of Oltchim's chemicals activities. However, the decline in rubber and plastics was close to the 12% fall we envisaged.

Petrom's closure of the Arpechim refinery has had a deleterious impact on downstream operations. Much of the country's petrochemicals production is reliant on the refinery, which suffers because it does not have access to a port (even though it imports most of its feedstock), meaning it is not commercially viable as a stand-alone operation. The closure of the refinery has cut off naphtha feedstock supply to a 200,000tpa cracker that was acquired by Oltchim in early 2010.

BMI has revised the following forecasts from Q113:

- Having reached a low in terms of output, 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 45.1 points out of 100, down 0.3 points since the previous quarter due to a deterioration in market risk because of the ongoing problems at Oltchim. This puts it 3.6 points behind Turkey and 3.4 points above Bulgaria.
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