Poland's Synthos to return strong profits on synthetic rubber - Erste

05 April 2011 17:31  [Source: ICIS news]

PRAGUE (ICIS)--Poland’s Synthos can expect "unbelievably high" company profits this year and next from a robust synthetic rubber market, Erste bank said on Tuesday.

Bad weather conditions and floods had continued to undermine east Asian plantations that produced rival natural rubber, thereby placing producers such as Synthos in a better bargaining position with substantial rubber consumers such as tyre producers, it added.

The product/feedstock margin for synthetic rubber at Polish unit Synthos Dwory would be €920 ($1,314)/tonne in 2011, versus €609/tonne in 2010, according to Erste’s latest forecast.

For Czech unit Synthos Kralupy, Erste forecast the product/feedstock margin would amount to €1,363/tonne this year, compared to the €957/tonne seen in 2010. 

Maintaining the bank’s ´Accumulate´ recommendation on the stock of Synthos, Europe’s second largest synthetic rubber producer, Erste analyst Tomasz Kasowicz concluded: “The rubber market should remain strong for the next few years, thus the environment should even be favourable for Synthos after 2012.

"The current state of the [rival] natural rubber markets and the Japanese disaster are at least neutral for Synthos, in our opinion. The lower availability of natural rubber caused by the Japan quake [Japan is the biggest rubber processor] may even increase demand for synthetic rubber in the short term, as less processed product is on the market," he added. 

Looking at Synthos’ likely expandable polystyrene (EPS) product/feedstock margins, Kasowicz said for 2011 it was expected to be more or less flat on a year-on-year basis.

According to his forecasts, it should amount to €546/tonne for Dwory in 2011, versus €504/tonne in 2010, and to €557/tonne for Kralupy, versus €540/tonne in 2010. 

Synthos‘ polystyrene (PS) performance should improve in 2011, due to reduced supply in Europe, Kasowicz also noted.

He predicted the PS product/feedstock margin for Dwory would be €775/tonne for 2011, versus €483/tonne in 2010, while for Kralupy it would be €787/tonne for 2011, against €520/tonne in 2010.

($1 = €0.70)


By: Will Conroy
+44 20 8652 3214



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