BMI View: The Polish petrochemicals industry is facing plenty of downside risk as a result of the potential effects of a Brexit-induced slowdown in manufacturing exports. Already, petrochemicals margins are under pressure and some polymer segments, notably polyethylene, saw declines in production in H116. Nevertheless, the industry is investing in new capacity , with 100,000tpa of extra polymer-grade propylene capacity available from 2018.
Polish petrochemicals producer PKN Orlen has pledged to expand propylene capacity to 550,000 tonnes per annum (tpa), a decision that appears to be justified by the 7.2% y-o-y growth in polypropylene output to 135,000 tonnes in H116. Overall plastic output rose 4.7% over the period. However, the local market in other polymers has come under pressure, with polyethylene output down 3.0% y-o-y to 192,100 tonnes and polyvinyl chloride (PVC) down 13.5% to 140,500 tonnes.
In terms of feedstock for polymer production, ethylene output down 2.3% y-o-y to 272,000 tonnes, while propylene production was down 0.5% to 197,000 tonnes. As a result, while propylene capacity utilisation was a healthy 87.6%, ethylene utilisation was just 71.5%.
A 47% rise in oil prices also raised the cost of Poland's naphtha and gasoil supply, which represent 75% and 25%, respectively, of cracker feedstock capacity. Consequently, petrochemicals margins fell 7.6% between January and June to EUR970/t.
Upsides in the Polish market are its relative strength in Central and Eastern Europe and the decline in the value of the zloty favouring domestic production.
Downside risks include the tenuous nature of European economic recovery and the effects of Brexit, although Poland is in a better position to shrug off the effects.
While the automotive industry - a major consumer of engineering plastics and rubber - is set to weather the downturn, albeit with mounting downside risk, consumption of polymers used in construction - particularly piping and PVC sheet - will be affected by falling growth. This quarter we have revised down construction growth forecasts from 4.7% to 4.3%, as the EU temporarily slows the disbursement of funding for new member states.
Poland's Petrochemicals Risk/Reward Index (RRI) fell this quarter by 0.9 points to 57.8 points. This is a result of a decline in its Risk score, as growth in its petrochemicals output slowed. An economic slowdown in the EU and in the UK, Poland's leading trade partner, will negatively affect its export-oriented manufacturing sectors, which will in turn affect the Polish petrochemicals market. This downward revision in its score has seen Poland fall one place in the Europe RRI rankings to 10th place, 0.2 points behind Hungary and 0.2 points ahead of Czech Republic.
The Poland Petrochemicals Report has been researched at source, and features BMI Research's market assessment and independent forecasts for key petrochemicals sub-sectors. The report also analyses the impact of regulatory changes, recent developments and the background macroeconomic outlook and features competitive landscapes comparing companies by products and services, sales, market share, investments, projects, partners and expansion strategies.
BMI's Poland Petrochemicals Report provides industry professionals and strategists, sector analysts, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Polish petrochemicals industry.
- Benchmark BMI's independent petrochemicals industry forecasts to test other views - a key input for successful budgetary and planning in the Polish petrochemicals market.
- Target business opportunities and risks in the Polish petrochemicals sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Poland.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis, covering the petrochemicals markets, regulatory changes, major investments, projects and company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the petrochemicals sector and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (2009-2013) and forecasts to end-2019 for key industry and economic indicators, supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:
- Energy: Oil production (‘000 b/d), oil consumption (‘000 b/d), net oil exports (‘000 b/d), gas production (bcm), gas consumption (bcm), net gas exports (bcm), oil refinery capacity (‘000 b/d).
- Petrochemicals: Ethylene capacity (‘000 tpa), ethylene production (‘000 tpa), ethylene consumption (‘000 tpa), polyethylene capacity (‘000 tpa), polypropylene capacity (‘000 tpa), polyvinyl chloride capacity (‘000 tpa), polyolefins consumption (‘000 tpa).
- Oil Products Prices: Price forecasts for all major oil-based products (USD/bbl) at major global energy trading hubs.
- Economic: Nominal GDP (USDbn), real GDP growth (%), GDP per capita (USD), population (mn), unemployment (%), exchange rate (against USD).
BMI’s Petrochemicals Risk Reward Index
BMI’s Risk Reward Indices provide investors (both corporate and financial) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
Structure, size and value of the industry sector; overview of the industry landscape and key players; assessment of the business operating environment and the latest regulatory developments.
Industry Trends & Developments
Evaluation of company and sector-wide developments, including key projects (as well as expansion plans), latest company financial details and proposed international ventures.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
Global & Regional Market Overview
Analysis of the key trends driving the global industry, including worldwide output/capacity and demand analysis across ethylene, polyethylene, polyvinyl chloride, polystyrene, polyethylene terephthalate and polypropylene. The regional analysis looks at the implications of local and global trends on specific company activity.
Sub-sectors covered by the Petrochemicals Reports include:
Oil & Gas, Oil Refining, Olefins (ethylene, propylene), Polyolefins (polyethylene, polypropylene), Polyvinyl Chloride, Polystyrene
Please note – not all country Reports cover all sub-sectors – see website for details.
The Petrochemicals Market Reports are based on a network of primary sources, such as multilateral organisations (ACC, APLA, Cefi c, ICCA, ICMA), national chambers of commerce and industry, national statistical offi ces, government ministries and central banks, and multinational companies.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.