Synthos to capitalise on European polystyrene plant closures

12 April 2010 15:42  [Source: ICIS news]

PRAGUE (ICIS news)--Poland's Synthos is well-placed to benefit from the numerous polystyrene (PS) plant closures that took place in Europe last year, Raiffeisen Centrobank said on Monday.

"As oversupply forced some players to shut down, we consider that Synthos, with lower labour costs and located [near to] the faster growing central and eastern European (CEE) markets, should profit from these moves in the mid-term," the bank said in a research note.

Permanent PS closures in Europe in 2009 included INEOS NOVA’s 90,000 tonne/year PS plant at Breda, the Netherlands, and Dow Chemical’s 65,000 tonne/year PS plant at Bilbao, Spain, along with its 50,000 tonne/year plant at Terneuzen, the Netherlands.

BASF closed 25% of its PS capacity at Ludwigshafen, Germany – estimated to be around 80,000 tonnes/year – and Total Petrochemicals closed 60,000 tonnes/year of PS capacity in France.

In the fourth quarter of 2009 Synthos, Europe’s second largest synthetic rubber manufacturer, posted an operating profit of zloty (Zl) 26.6 mn ($9.3m, €6.89m) in the PS segment following a Zl 4.2m loss in the preceding quarter and comparing to a Zl 37.2m loss in the fourth quarter of 2008.

Raiffeisen  described this as a "considerable improvement" after weakness in the previous quarters.

"On the expandandable PS (EPS) market (mostly insulation material) we see the construction recovery in the CEE as a positive factor boosting prices. Starting from 2010 the contract prices went up in line with raw materials," it added.

($1 = Zl 2.86; €1 = Zl 3.86)

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By: Will Conroy
+44 20 8652 3214

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