Raport_2008_ENG_petrochemia
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The Czech Republic

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Petrochemicals

Since the beginning of the year until the third quarter of 2008, the European petrochemical market reported high demand and satisfactory margins, with the exception of the second quarter, when the margins were low. The situation started deteriorating in early August, together with the beginning of the crisis. The consequent breakdown in demand prevented us from profiting from sudden drops in crude oil prices and record crack margins in the fourth quarter. We estimated that at the end of 2008, approximately 40% of European ethylene and propylene production capacities were switched off. Similar was the case with most of the other petrochemicals manufactured in the Czech Republic.

 

 

 

Production volume of selected petrochemicals in Unipetrol RPA in 2007–2008 (tonnes)

  2007 2008 Dynamics
Ethylene 408 552 464 727 13,70%
Propylene 208 667 238 743 14,40%
Benzene 163 341 179 381 9,80%
Carbamide 167 831 189 598 13,00%
Ammonia 219 464 260 313 18,60%
Oxo alcoholes 48 368 55 049 13,80%

Petrochemicals manufactured at Unipetrol RPA were mainly located on the Czech market, under long-term contracts. The main recipients of products manufactured at Czech plants were: Spolana, Synthos, Agrobohemie and Deza a.s. Despite the plummeting sales in Central Europe, recipients from countries like Germany, Poland, Slovakia and Austria held an important position among our customer portfolio.

The main import sources to the Czech Republic were Germany, Ukraine and Russia. Polypropylene was also imported in large volumes from Poland. Other petrochemical products were imported from Germany, Russia, Slovakia, Hungary and Poland.

Plastics

The economic downturn in 2008 reduced the demand for high-density polyethylene (HDPE) in the Czech Republic and Slovakia to 114 thousand tonnes, i.e. approximately 3.7% less than in 2007. Despite adverse macroeconomic conditions, we maintained our share in the Czech market.

The global economic slowdown had a negative impact on the Czech polypropylene (PP) market. However, despite a fall in the demand for PP from 342 thousand tonnes in 2007 to 337 thousand tonnes in 2008, we managed to slightly increase our share in the Czech PP market.

Polyolefin production volumes at Unipetrol in 2007–2008 (thousand tonnes)

  2007 2008 Dynamics
HDPE 267,6 291,9 9,1%
PP 186,7 205,7 10,20%
Total 454,3 497,6 9,50%

Additional factors that negatively influenced production on volumes at the Unipetrol plants were technological problems at Olefins and a additional standstill in October 2008.

Polyolefin sale volumes at Unipetrol in 2007–2008 (thousand tonnes)

  2007 2008 Dynamics
HDPE 265,5 288,5 8,60%
PP 187 196,4 5,00%
Total 452,5 484,9 7,10%

The first symptoms of a falling demand for polyolefin in the Czech Republic could already be observed in the second quarter of 2008. The slowdown was parcitulary visible in the foil and bottle segment, as well as in plastic for common use. Polyethylene consumption was also affected by a ban on distributing plastic bags in certain European states.

The intensifying financial crisis was also reflected in the demand from the automotive industry, which plummeted by 50%. The company was affected by technological problems with the Olefin unit, connected with lower quality of ethylene and the consequent inability to manufacture certain types of polyethylene in the second half of 2008.

The top foreign recipients of polyethylene and polypropylene from the Czech plants were German companies. Compared to 2007, HDPE export went up by over 10% and PP by nearly 6% in 2008.


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