Boston, MA -- (ReleaseWire) -- 02/13/2014 -- The Slovakian petrochemicals industry experienced strong growth as a result of export-led growth and improved operating margins, despite the country's lacklustre overall economic performance, according to BMI's latest Slovakia Petrochemicals Report. Modest growth in capacity is expected in the medium-term. In 10M13, the chemicals production index showed 4.9% year-on-year (y-o-y) growth while the rubber and plastics index rose 4.1%. Chemicals output had reversed an average decline of 4.4% in 2012 while rubber and plastic strengthened from growth of 2.0%. Local petrochemicals producer Slovnaft reported that in 9M13 monomer and polymer output was up 12% y-o-y to 243,000 tonnes.
In 2013, Slovakia's petrochemicals capacities included 210,000 tonnes per annum (tpa) ethylene, 50,000tpa benzene, 40,000tpa ethylene oxide, 40,000tpa ethylene glycol, 180,000tpa low density polyethylene, 255,000tpa polypropylene and 65,000tpa xylenes. The industry is small by international standards and largely fulfils domestic demand, although it has become more efficient and productive as a result of the consolidation of Slovnaft's petrochemicals operations into MOL and the implementation of a common single-channel polymer sales operation between MOL's TVK and Slovnaft.
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BMI has revised the following forecasts:
- The Slovakian petrochemicals industry is poised for stronger growth in 2014, although this will be mostly driven by the external sector, the country will remain vulnerable to further slowdown in the eurozone as a result. Export trends will be reflected in the performance of the country's petrochemicals industry. However, domestic market demands will become more evident as the year progresses with real GDP growth forecast at 2%. Downside risks have diminished, though we caution that the rebound in consumer confidence remains fragile and regional headwinds could yet weigh on the short-term outlook.
- Car production continued to grow in 2013, albeit at more modest rates, and this rate of growth is expected to be sustained through the forecast period. Slovakian automotive output growth will be sustained over the medium term, ensuring strong growth in consumption of plastic and rubber goods by the country's automotive parts sector.
- On the downside, consumption of PVC and polymer piping will take a hit from the sluggish performance in the construction industry. Slovakia's poor economic performance has been the main hindrance to growth in the sector, which should be benefiting from increased inflows thanks to EU membership. Performance is unlikely to improve over the medium-term, making the sector a drag on the country's petrochemicals market.
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