BMI's Executive Summary

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The Czech petrochemical industry is approaching the end of a period of restructuring, which will simplify flows of intermediate products within a single company and make better use of existing synergies, according to BMI's latest Czech Republic Petrochemicals Report.

Leading Czech petrochemical producer Unipetrol is currently undergoing a three year restructuring programme which began in 2006. The programme involves the divestment of several Unipetrol chemical assets and the improvement in the efficiency of existing facilities. From H207, Chemopetrol and Unipetrol Rafinérie merged into one single unit, Unipetrol RPA. The move will lead to more efficient internal sourcing and the sale of its own products within the Group. It will also allow for better control over the entire production and sales chain, from feedstock purchase to customer care. The main aim of the restructuring is to focus on the olefins and polyolefins activities, which formerly belonged to Chemopetrol. The restructuring also aims to maximise the cost benefits of integration between the refining operations of Unipetrol and Poland's PKN Orlen, which owns a majority stake in the Czech company. PKN also divested Unipetrol's stakes in ammonia and urea distributor Agrobohemie, and fertiliser producer Lovochemie, as well as in Aliachem in 2007.

Domestic ethylene consumption rose by an estimated 2.9% y-o-y in 2007 to 460,000 tonnes, while ethylene exports declined 11.5% y-o-y to 100,000 tonnes as more local production was utilised by domestic industry. Polyethylene (PE )exports fell 2.8% y-o-y to 282,000 tonnes, while imports were up 10.5% y-o-y to 105,000 tonnes as domestic demand absorbed production. Polypropylene (PP) exports fell 1.8% y-o-y to 110,000 tonnes, while imports fell 1.9% y-o-y to 105,000 tonnes. The key drivers for polymer demand were industrial production, which grew 6.1%, and consumer expenditure, which rose 6.3%. Unipetrol intends to raise its PP production capacity by 20% to 300,000tpa and its polyethylene capacity by 10% to 355,000tpa. This development will boost petrochemicals exports over the forecast period, although exports will begin falling again after extra capacity comes online in 2008. By 2012, PE exports will be 2.5% below the level achieved in 2007, while PP exports should be around the 2007 level.

Czech Republic's position in BMI's Petrochemicals Business Environment matrix for Emerging Europe has risen from fourth place to joint second with Poland on 57.2 points, chiefly as a result of the revision in the scoring system to include a broader range of risk factors. The Czech Republic is 0.3 points ahead of Hungary, but 1.7 points behind Russia. While the country has a smaller petrochemicals sector than either Poland or Hungary, it has a more supportive business environment with lower levels of risk and the best financial and physical infrastructure of the countries under review. However, the Czech Republic's score is unlikely to improve over the next five years, with other countries in the region set to raise petrochemicals capacity at a higher rate.

Contents

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Chapter 1 - Executive Summary

Market Overview

Industry Developments

Business Environment

Industry Forecast

Czech Republic Petrochemicals Industry SWOT

Czech Republic Political SWOT

Czech Republic Economic SWOT

Czech Republic Business Environment SWOT

Chapter 2 - Market Overview

Market Structure

Table: Czech Republic: Petrochemical Sector Cracker Capacity Data and Forecasts ('000 tpa)

Business Environment

Chapter 3 - Industry Developments

Chapter 4 - Industry Forecast Scenario

Table: Czech Republic Sector Forecasts

Chapter 5 - Economic Outlook

Table: Growth And Output

Chapter 6 - Company Monitor

Unipetrol SWOT

Unipetrol

Agrofert Holding

Spolchemie

BorsodChem MCHZ

Chemoprojekt

Chapter 7 - BMI Forecast Modelling

How we generate our industry forecasts

Chemicals & Petrochemicals Industry

Cross checks

Competitive Landscape for Emerging Europe Petrochemicals Reports: Sample of Companies Ranked

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Comparative company analyses and rankings by US$ sales, % market share, employee size, registration date and ownership structure. Company SWOTs (Strengths, Weaknesses, Opportunities, Threats) on all leading international and national operators in each market, including competitive intelligence in the following: Overall geographic presence, competitive positioning against local companies; production capacity, sales and market share; joint ventures, foreign direct investment, projects and acquisitions strategy.