Poland's Ciech faces weak demand, competition from Turkey

24 March 2010 13:12  [Source: ICIS news]

PRAGUE (ICIS news)--Europe's second-largest soda ash producer, Ciech, is suffering from weaker demand and competition from imports of natural soda sourced from Turkish trona mines, Erste Bank said on Wednesday.

"Weaker market demand and competition from natural soda imported from Turkey to European markets are the main reasons for the weaker prices assumed for 2010," said Erste in an analysis, predicting that the soda ash price obtained by the Polish company would fall from zloty (Zl) 711 ($249, €182)/tonne in 2009 to Zl 680/tonne this year.

"Despite weaker year-on-year results, the soda ash segment will remain the strongest division in the Ciech group. We assume that in 2010 the soda division will see earnings before interest, tax, depreciation and amortisation (EBITDA) at Zl 265m versus Zl 351m in 2009. However, this result includes around Zl 48m from the disposal of underground caverns," it added.

Erste also noted that rebounding markets were bringing something of a recovery in Ciech's organic division sales of toluene di-isocyanate (TDI) and polyurethane (PU) foams.

"Higher product feedstock margins should result from much higher TDI prices year on year. We estimate TDI prices for 2010 at €2,288/tonne versus €1,978/tonne in 2009, on average."

The privatisation of Ciech was recently postponed by the Polish treasury until it has agreed a restructuring of Zl 1.56bn in loans with a group of banks.

Erste said the company was much closer to signing a debt restructuring agreement. "All conditions have been agreed upon and the ball is now in the banks’ court. One of the conditions is for the firm to reduce its debt … by a few hundred million zloty by the end of 2010," it added.

($1 = Zl 2.88, €1 = Zl 3.89)

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By: Will Conroy
+44 20 8652 3214



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