Poland's Ciech likely to benefit from rise in soda ash price - bank

27 September 2012 16:50  [Source: ICIS news]

LONDON (ICIS)--Poland's Ciech stands a chance of benefiting from a price increase in soda ash contracts for 2013, Raiffeisen Centrobank said on Thursday.

“In our opinion, the soda margin should rebound after a weak Q2 [second-quarter] depressed by one-offs and temporary weakness of German energy prices that have already recovered,” Raiffeisen analyst Dominik Niszcz wrote in an analysis of Ciech, central and eastern Europe's largest soda ash maker.

“The outlook is more disturbing for the organic business – [toluene di-isocyanate (TDI) subsidiary] Zachem may return to negative margins following a positive contribution in Q2, when the TDI-toluene margin reached the highest level in eight quarters, while the contribution from plant protection chemicals is significant only in the first half of the year,” he added.

Returning to the plus-points for Ciech looking ahead, Niszcz noted that the global soda ash market remained relatively strong compared with the European market alone.

“Price increases over the year in India and the United States bode well for the yearly contracts in 2013, while cost pressure is limited, for example with cheaper coal and anthracite, implying healthy margins. A slowdown in China, where production costs for some of the players have grown above the selling price, is a situation unlikely to persist,” he said.

“Historically, the European soda ash market often lagged the global economy – in 2009 it reached a peak in autumn 2009, six months after prices in India started to fall,” Niszcz added.

By: Will Conroy
+44 20 8652 3214

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