Poland's Orlen faces even lower petchem margins in 2013 - Erste

27 August 2012 16:55  [Source: ICIS news]

LONDON (ICIS)--Poland's PKN Orlen is contending with very low petrochemical margins that will fall even further in 2013, Erste Group Bank said on Monday.

“We believe that the slowing [European] economy may reduce demand for polyolefins next year, and thus assume a [model] petrochemical margin drop in 2013,” said Tomasz Kasowicz in Erste's latest analysis of the oil and petrochemicals group.

“Apart from the tightening situation in polyolefins, Orlen's polyvinyl chloride (PVC) business remains depressed, while fertilizers are struggling with higher gas prices,” he added.

Erste is forecasting a decline in Orlen's [model] petrochemical margin to €609/tonne ($761/tonne) in 2013 from an expected €641/tonne this year. 

In March, WOOD & Company investment bank described such low figures as unsustainably weak for Orlen's petrochemical division.

On the positive side, Erste said Orlen's declining polyolefin sales volumes and margins are being offset to a degree by a depreciation of the Polish zloty against the euro.

Erste, which has retained a 'Reduce' rating on Orlen's stock, noted that the group is trying to find new profit channels by diversifying into shale gas, but said that returns from its investments in this sector are several years away.

($1 = €0.80)

By: Will Conroy
+44 20 8652 3214

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