Hungary's BorsdChem on track for Jan VCM capacity boost

Source: ICIS News

2004/12/30

LONDON (CNI)--Hungarian vinyls producer BorsodChem is on track to lift annual vinyl chloride monomer (VCM) production capacity at its Kazincbarcika site to between 250 000/tonne and 260 000/tonne by the end of February 2005, the company confirmed on Thursday.

Current VCM production capacity at Kazincbarcika in northern Hungary is 180 000 tonne/year.

Ethylene for the expanded unit will be supplied by Hungarian oil and gas company TVK which on 25 December started up its new ethylene cracker at Tiszaujvaros in eastern Hungary.

The new 250 000 tonne/year TVK cracker, the start up of which was delayed for four months, doubles ethylene availability to BorsodChem from 60 000-65 000 tonne/year to 120 000-130 000 tonne/year, BorsodChem chief executive Laszlo Kovacs told CNI. It will raise TVK’s ethylene output at Tiszaujvaros to 620 000 tonne/year.

The welcome Christmas present will mean that BorsodChem can raise VCM capacity as planned, Kovacs said, by the end of January or possibly in February. BorsodChem intends to lift VCM capacity further, he added, as part of an ongoing strategy to meet growing vinyls demand in Central and Eastern Europe.

The additional VCM will be fed to BorsodChem’s upgraded PVC units where production capacity was lifted from 300 000 to 330 00 tonne/year at the end of September. However, Kovacs confirmed that BorsodChem would continue to take VCM from the 300 000 tonne/year Kalush, Ukraine, plant of its current supplier, Lukor, to feed the units.

BorsodChem wants to lift PVC and VCM capacity further to meet expanding per capita consumption in parts of Central and Eastern Europe that are well below those in the European Union (EU). In the final phase of current plans PVC capacity at Kazincbarcika will be debottlenecked to 400 000 tonne/year in 2006. VCM capacity will rise to between 320 000 and 330 000 tonne/year.

BorsodChem will add 80 000 tonne/year of chlorine capacity by the fourth quarter of next year from 125 000 tonne/year today, Kovacs said. In 2006, the company expects a further stepwise addition of 40 000 tonne/year of chlorine capacity to meet the additional internal demand.

Vinyls markets in Central and Eastern Europe are growing between 5% and 7% a year, Kovacs pointed out, as demand in countries like Romania and the Ukraine begins to catch up with that elsewhere in the region.

BorsodChem is currently sold out in PVC, Kovacs said, with particularly strong demand from Poland and from countries like Serbia and Croatia where plant closures have reduced product availability.

Margins are healthy on PVC and VCM, he said, adding that he believed 2005 will be a good year for PVC producers in the region.