Naphtha fall could boost CEE petchems’ Q4 results - ING

11 December 2008 16:22  [Source: ICIS news]

PRAGUE (ICIS news)--The remarkably steep descent of the naphtha feedstock price should add a shine to the fourth-quarter results of central and eastern Europe's petrochemical producers despite the downturn in product demand, ING bank said on Thursday.

“The naphtha price has basically collapsed. I've never seen anything like it in my time analysing these petrochemical companies,” said ING analyst Tamas Pletser.

While the crude oil price had declined sharply from $1,073/tonne (€826/tonne) in July, or $147/bbl, to the current $329/tonne, or $45/bbl, the naphtha price had fallen even more sharply from $1,200/tonne in July to $240/tonne, he said.

“So the fourth quarter does not look so bad for companies such as [Czech petrochemical producer] Unipetrol,” he said.

As the negative consequences of recession-hit demand for polymers and monomers intensified, “the erosion in the sales and prices obtained for the end products will catch up with the erosion in the naphtha price, and we could really see the effects of this from the first quarter of next year,” said Pletser.

“My fear is that the downturn will mean Unipetrol, for instance, will have to cut production,” said Pletser.

“They won't be able to find enough buyers, in my opinion. Not when you look at the economic situation in their neighbouring big export market of Germany.”

($1 = €0.77)

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By: Will Conroy
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