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BMI Industry View
Romania's petrochemicals industry is witnessing a strong performance in a market that is witnessing
stronger growth. Increased household disposable income and the country's strategic position in the
automotive sector are supporting petrochemicals consumption. As a result, there will be plenty of upside for
the Romanian petrochemicals industry. Growth could be boosted further if Oltchim resumes full production
following privatisation, although BMI is mindful that some loss-making units could be permanently closed.
Weaker oil prices have helped Romania's downstream sectors, with refining margins improving as a result,
and thereby reversing the situation of regular quarterly losses. This is helping drive down the cost of
naphtha feedstock used in the Romanian petrochemicals industry, reviving the fortunes of the sector.
Romania's rubber and plastics output grew 4.0% year-on-year (y-o-y) in H116, based on the official
production indices. However, chemicals output declined 9.1% y-o-y. The output rates suggested the
petrochemicals industry was following the trends observed in 2015 when rubber and plastic grew 8.7% and
chemicals declined 5.0%. Nevertheless, Romania's biggest petrochemicals producer Oltchim reported 3.7%
y-o-y rise in turnover, generating a profit of RON24.4mn (EUR5.4mn), compared with a loss of
RON6.37mn in H115. This was largely driven by exports.
? Romania has modest olefins capacities of 200,000 tonnes per annum (tpa) ethylene and 100,000tpa
propylene, feeding capacities totalling 320,000tpa polyethylene and 80,000tpa polypropylene. It also has
60,000tpa polystyrene and 170,000tpa polyvinyl chloride. The industry is small and lacks economies of
scale to compete with foreign producers and we see no reason for capacity growth over the next five
? In spite of the return to profitability, the government has indicated it will not privatise Oltchim in 2016.
Moreover, the government's decision to assist the company is now the subject of an investigation by EU
regulators for possible breach of state aid rules, according to reports in April 2016. The European
Commission said it would examine the cancellation of debt and continuing provision of electricity, steam
and saline solutions to Oltchim.