Poland’s chemical industry may be hit by currency, feedstock costs

An interesting report, just out, today says growth in the Polish petrochemicals industry could be hindered by the appreciation of the zloty and rising naphtha costs.

According to the report, Poland has a position as a regional outperformer owing to its resilient internal demand driven economic model, manageable private sector leverage, robust banking sector and stable political dynamics.

While this demand should lift domestic petrochemicals production, currency appreciation will also undermine the competitiveness of the domestic industry.

The report blames impending Middle East capacities for undermining competitiveness: “With the cost of naphtha feedstock rising in line with oil prices, this could benefit lower cost ethane-based producers in the Middle East. Furthermore, additional capacity is expected to hit the market at a time when demand is slackening. Consequently, petrochemicals prices are expected to remain under pressure in 2010 and analysts expect refining margins to remain weak until 2011.

By 2010, Poland had olefins capacities of 700,000tpa ethylene, 475,000tpa propylene and 60,000tpa butadiene. Polymer capacities include 320,000tpa HDPE, 170,000tpa LDPE, 300,000tpa PP, 550,000tpa PVC, 90,000tpa PS and 120,000tpa PET.

PKN Orlen is expected to complete construction of a 600,000tpa purified terephthalic acid (PTA) plant in H210, which will make it the Central and Eastern Europe (CEE) region’s first PTA producer. Orlen’s other plans include xylenes facilities with 400,000tpa paraxylene and 40,000tpa orthoxylene at Plock and improving ethylene oxide and butadiene units there.

An olefins complex is planned for Plock, although the capacity has not been announced. Output from a third plant would be used to feed the expansion of BOP’s polyolefins capacity at Plock. BOP is a JV between LyondellBasell and Orlen, and is Poland’s only producer of polyolefins.


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