Czech Republic Petrochemicals Report Q4 2017
The Czech petrochemicals industry is experiencing strong output growth due to the resumption of operations at Unipetrol's cracker following a lengthy shutdown and robust sales. The beginning of production at the company's new PE3 polyethylene unit will also fuel polymer production in 2018. Growth rates will decline markedly from 2019 as the industry approaches full operational capacity. While production will be supported by the strength of the country's manufacturing sector, particularly the automotive industry, there are risks posed from the supply side in the form of rising feedstock costs and on the demand side as export-orientated industries see competitiveness put under strain by the rising value of the koruna.
The resumption of production at Unipetrol's cracker in August 2016 due to fire damage should lead to strong growth in output and sales. Although market conditions are more risky, the country's manufacturing sector should be buoyed up by growth in the automotive and construction sectors, supporting growth in petrochemicals consumption. Czech chemicals output grew 19.9% y-o-y in H117 while rubber and plastic output grew 8.3% y-o-y. Unipetrol reported that petrochemicals sales volumes grew 128% y-o-y to 956,000 tonnes while its total revenues rose 60% to CZK61bn. The model combined petrochemical margin decreased by 5% y-o-y to EUR834/tonne in H117 due to a decline in polyethylene and polypropylene spreads.
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