Druzhba supplies to the EU and war complications

Due to increased concerns over crude security on the Druzhba oil pipeline, orders for Russian oil supplies to the EU rose by 16% in June compared to May.   Only the southern branch of the Druzhba is currently operating and is key to refinery supplies to Hungary, Slovakia and the Czech Republic.  The recent dam explosion at Nova Kakhovka in Ukraine provides warnings over the potential impact of war damage to other infrastructural facilities.   

MOL organised a total order of 900,000 tons of oil in June for delivery through the Druzhba to Hungary and Slovakia.  As for the Orlen Group Unipetrol is the only member still buying crude from Russia.  Unipetrol ordered up to 430,400 tons in June, compared to 400,000 tons in May.

Hungary’s average price for crude imports in January to March amounted to €390 per ton, mainly helped by the price cap on Russian crude.  Purchases of crude from Russia in January to March amounted to 1.003 million tons from the total of 1.563 million tons, thus accounting for 64% of supply.  The Russian average price of €316.521 per ton compared against the next lowest price of €433.529 per ton from Iraq, although volumes from Iraq were small.  Volumes from Kazakhstan, delivered by the Druzhba, amounted to 228,331 tons in the first three months at an average price of €550.181 per ton. 

MOL has started transporting crude oil from its oil field in Azerbaijan to Slovnaft in Bratislava via the Adria oil pipeline.  The Adria is seen the key alternative to the Druzhba for Hungary and Slovakia. 

Polish imports of crude oil 2023

Poland imported 8.806 million tons in the first four months in 2023 at an average price of €537.3 per ton.  Saudi Arabia supplied 4.092 million tons at an average price of €567.9 per ton followed by Norway which supplied 2.052 million tons at an average price of €549.5 per ton. 

Partly due abandoning Russian crude, Orlen has predicted lower margins in the refining sector in the second quarter.  First quarter profits benefited to some extent from lower Russian crude prices until late February, although the main factor behind increased profits was the consolidation of Lotos and PGNiG into the Orlen Group.  Orlen’s first quarter revenues increased more than two-fold to zl 110.27 billion (€24.796 billion).  Due to consolidation Orlen's total sales volumes in the refining segment rose by 26% to 7.4 million tons, mainly due to higher sales in Poland, while refining margins jumped to $18.3 per barrel of crude oil from $6.0 in the same period in 2022.

PKN Orlen-petrochemical production Jan-Apr 2023

PKN Orlen reduced ethylene production in the first four months in 2023 to 123,200 tons from 162,500 tons in the same period in 2022.  Propylene production at Plock dropped from 155,700 tons to 110,100 tons.

Orlen Group utilisation rates

April output continued the trend from the first quarter when all of the plants in the Orlen Group showed lower utilisation rates than in the first quarter in 2022 although better than in the fourth quarter.  Utilisation rates this year have been affected by a combination of demand side factors and maintenance. 

The olefins complex at Plock operated at 78% of capacity in the first three months.  This was partly due to the production problems at Anwil’s PVC plant which itself only ran at 64% in the first quarter.  Other facilities at Plock such as the BOP division ran only at 70% in the first quarter.  This was the result of a shutdown, which also affected the metathesis plant where propylene is produced. 

As a result of lower production sales of petrochemicals for the Orlen Group dropped to 1.119 million tons in the first quarter against 1.397 million tons in the same period in 2022.  PTA production at Wloclawek at 66% of capacity in the first quarter due to weaker demand and maintenance, whilst in the Czech Republic Orlen Unipetrol’s olefin complex operated at 85% in the first quarter which was adjusted to the availability of PE2/PE3 installations.  In Lithuania the PPF Splitter reported lower utilisation as a result of lower demand.

In terms of revenues from petrochemicals first quarter sales amounted to €1.253 billion against €1.692 billion in the same period last year.  Costs of €1.346 billion in the first quarter meant that Orlen recorded an operating loss from petrochemical sakes of €45.676 million versus a profit of €61.419 million in the first three months last year.

Petrochemical margins for PKN Orlen remain relatively high despite the weaker performance in the past few quarters.  Positive margins helped to offset the high energy costs in 2022 which affected European petrochemical producers. 

Ethylene margins amounted to €668 per ton in the first quarter against €664 in Q1 2022 whilst propylene dropped from €679 per ton to €564 per ton.

Orlen petrochemical investments

PKN Orlen is in the early stages of foundation work on its Olefins III investment which exceeds by size the other petrochemical investments being undertaken in Central Europe.  Local residents in the Plock region are concerned about the project from numerous angles, in particular environmental and also the employment of several thousand foreigners.   By the second half of this year up to 10,000 workers could be employed on the project.  In order to accommodate such a large number of employees, a workers' town has already been built next to the investment.  

From Orlen’s updated strategy, announced in the first quarter this year, the emphasis on petrochemicals is aimed at increasing the Group's resistance to unfavourable market trends in traditional hydrocarbon-based fuels.  The expansion of production is aimed at tackling part of the deficit in petrochemicals and polymers in the Polish economy.   

Polish propylene imports Jan-Apr 2023

Imports of propylene into Poland dropped in the first four months in 2023 to 40,362 tons against 62,356 tons in the same period in 2022.  Average prices dropped from €1239.5 per ton in January to April 2022 to €972.9 per tons in the first four months in 2023.   Although propylene monomer has not been sanctioned specifically by the EU to date, Russia stopped exporting to Poland in the latter part of 2022. 

To compensate for the drop in imports from Russia and Ukraine (where production was suspended at Karpatneftekhim following the Russian invasion), Poland started to receive deliveries from other regional countries in East Europe.  Propylene from Bulgaria came from the Bourgas refinery which is owned by Lukoil amounted to 4,991 tons in the first four months.  Overall Germany is now the main supplier of propylene to Poland, shipping 26,417 tons in the first four months versus 20,784 tons in the same period in 2022.  The Netherlands increased shipments from 4,421 tons in the first four months last year to 6,045 tons in the same period in 2023.

Polish butadiene imports Jan-Apr 2023

Poland imported 26,385 tons of butadiene monomer in the first four months in 2023, versus 31,349 tons in the same period in 2022.  Imports from Hungary dropped from 10,274 tons last year to 8,857 tons in January to April 2023, whilst shipments from Austria increased from 12,046 tons to 14,441 tons.  

Hungarian propylene & butadiene imports Jan-Mar 2023

Hungarian propylene exports amounted to 27,266 tons in the first quarter this year, all of which went to Slovakia at a price of €1143.9 per ton.  MOL currently produces a surplus of propylene, and is also building a new plant of 100,000 tpa which is intended to cover the new propylene oxide plant.  Propylene production by Slovnaft is not sufficient to maintain high utilisation rates for polypropylene and additional supplies need to be purchased.  Slovnaft in Slovakia is currently upgrading its steam cracker unit which should increase the capacity for propylene production. 

Hungarian butadiene exports dropped slightly in the first quarter to 16,036 tons versus 16,324 tons in the same period in 2022.  Prices per ton have fallen from €960.7 per ton in the first quarter last year to €882.4 per ton.   MOL produced 21,000 tons of butadiene in the first quarter, of which around 75% is exported.  The remainder consumed in a small plant at Tiszaujvaros for synthetic rubber production.     

Czech monomer trade, Jan-Apr 2023

Propylene imports into the Czech Republic increased from 13,285 tons in January to April 2022 to 17,516 tons in the same period in 2023.  Germany supplied 12,808 tons in the first four months for €12.978 million.  Other suppliers included Bulgaria from which the Czech Republic purchased 2,712 tons for €1.787 million and Romania where volumes amounted to 1,048 tons for €987,000.  Average prices for Czech propylene imports dropped from €1323 per ton in the first four months in 2022 to €1063 per ton in 2023.   

Ethylene exports from the Czech Republic amounted to 3,970 tons in the first four months in 2023 against 5,039 tons in the same period last year, whilst ethylene imports rose from 11,161 tons to 18,340 tons. 

Germany supplied 18,265 tons of ethylene to Czech Republic in the first four months in 2023 at a cost of €16.968 million.  This compares against 23,062 tons for the whole of 2022.

Czech imports of butadiene in the first four months this year increased from 23,958 tons to 35,198 tons, supplementing butadiene production at Kralupy.  Germany supplied 25,055 tons for €22.449 million, followed by Hungary which supplied 9,097 tons for €8.677 million.

Central European styrene trade Jan-Apr 2023

Poland imported 26,981 tons of styrene in the first four months in 2023 versus 34,418 tons in the same period in 2022.  The Netherlands reduced shipments to Poland from 21,254 tons to 13,878 tons whilst imports from Germany rose from 4,740 tons to 5,632 tons.  Costs averaged €1176.1 per ton in January to April 2023 against €1457.9 per ton in the same period in 2022. 

Styrene imports into the Czech Republic amounted to 10,019 tons in the first four months in 2023, rising from 7,775 tons in January to April 2022.  Costs averaged €1087.0 per ton in January to April 2023 against €1553.8 per ton in the same period in 2022. 

Hungarian styrene imports amounted to 21,880 tons in the first quarter in 2023 against 26,749 tons in the same period in 2022, with average prices rising from €1175.8 per ton to €1317.3 per ton in 2022.  Italy supplied 25,615 tons in January to March 2022 which fell to 20,600 tons in the same period this year.  Styrene in Hungary is used for the production of polystyrene by Versalis at the Szazhalombatta plant. 

Polish polyethylene production & trade Jan-Apr 2023

Polyolefin trade into and out of Poland experienced declines in the first four months in 2023, with nearly all grades of polyethylene and polypropylene affected.  Based on production and trade, polyethylene consumption amounted to 397,000 tons in the first four months in 2023 against 478,800 tons in January to April 2022. 

PKN Orlen and Basell Orlen Polyolefins (BOP) produced a combined total of 103,000 tons of polyethylene at Plock in the first four months in 2023 against 112,900 tons in the same period last year.  Poland’s consumption of polyethylene amounted to 1.291 million tons in 2022 versus 1.350 million tons in 2021.

Polyethylene imports into Poland totalled 389,389 tons in January to April 2023 versus 490,875 tons in the same period in 2022, with average prices dropping from €1831.6 per ton to €1485.9 per ton this year. 

HDPE imports into Poland dropped from 167,558 tons to 137,081 tons in January to April 2023 whilst LDPE imports dropped from 127,521 tons to 104,988 tons.  LLDPE imports declined from 89,895 tons to 66,379 tons.  Imports of LLDPE dropped from 255,430 tons in 2021 to 238,186 tons which were sourced mostly from West Europe, including France, the Netherlands and Germany. 

Polyethylene exports from Poland have also dropped this year.  Overall imports decreased from 124,950 tons in the first four months in 2022 to 95,412 tons in the same period in 2022, with average prices dropping from €1643.5 to €1474.6.  HDPE was Poland’s largest export grade amounting to 64,740 tons in the first four months against 87,593 tons in January to April 2022. 

Polish polypropylene production & trade Jan-Apr 2023

Polypropylene production at Plock dropped from 119,300 tons in January to April 2022 to 92,500 tons in the first four months this year.  Overall, the supply/demand balance for Polish polypropylene dropped from 365,000 tons in the first four months in 2022 to 278,900 tons in the same period this year.

Imports of polypropylene into Poland dropped from 354,094 tons in the first four months in 2022 versus 270,399 tons in the same period in 2023, with average prices dropping from €1839.8 to €1551.6 per ton.  Homo grade imports dropped from 232,274 tons in the first four months last year to 170,390 tons. 

Poland imported 609,740 tons of polypropylene homo grade in the whole of 2022 for a total value of €1027.5 million.  Homo grade PP imports into Poland dropped from 727,232 tons in January to December 2021 partly due to higher production at Plock. 

Copolymer imports into Poland fell from 113,574 tons in the first four months in 2022 to 93,067 tons in the same period this year, with costs dropping to €154.463 million against €227.539 million in the same period in 2022.  Germany was the largest supplier of propylene copolymers to the Polish market in 2022 transporting 82,907 tons for €156.748 million.  In the first four months in 2023 Germany supplied 27,866 tons of copolymers to the Polish market for €46.858 million. 

Supply sources this year have changed as Russian imports have disappeared from the market.  In 2021 Poland imported 155,805 tons of polypropylene homo grade from Russia for a total grade €198.656 million.  Shipments from Russia accounted for 21% of total Polish imports in 2021 but dropped to 8.5% in 2022.  Russia provided 51,179 tons of homo grade to Poland in 2022 for €75.955 million, but there has been no trade this year or expected in the foreseeable future. 

Polish exports of polypropylene dropped from 108,430 tons in the first four months in 2022 to 82,302 tons in the same period in 2023.  Average prices for exports amounted to €1486.5 per ton in the first four months which was down from €1775.8 per ton last year.

Overall consumption of polypropylene in Poland amounted to 280,600 tons in the first four months against 365,000 tons in the same period in 2022.

Czech polyolefin consumption 2023

Czech consumption of polyethylene amounted to 78,504 tons in the first quarter in 2023 against 78,005 tons in the same period in 2022, whilst polypropylene consumption dropped from 129,307 tons to 118,680 tons.  In contrast to the Czech polyolefin market where polypropylene is the dominant polymer Polish polyolefin consumption is dominated by polyethylene. 

Czech polyethylene trade Jan-Apr 2023

Czech exports of polyethylene amounted to 127,602 tons in the first four months in 2023 from 141,371 tons in the corresponding period in 2022, with average prices falling from €1677.4 per ton to €1453.6.  HDPE represents the largest category of Czech polyethylene falling from 123,307 tons to 113,399 tons.  Lacklustre demand has been one of the main drivers of lower polyethylene prices this year.

Imports of polyethylene into the Czech Republic dropped from 110,633 tons in the first four months in 2022 to 98,216 tons in 2023.  Average prices dropped from €1947.0 per ton to €1717.1 per ton.  HDPE imports dropped from 43,393 tons to 38,900 tons, whilst LDPE imports decreased from 43,318 tons to 35,110 tons. 

Polypropylene exports from Orlen Unipetrol dropped in the first four months from 106,564 tons in 2022 to 100,797 tons in 2023. Values dropped from €190.5 million to €155 million.   The largest market for Czech polypropylene exports in the first four months in 2023 was Poland, taking 10,820 tons followed by Germany with 10,398 tons. 

Polypropylene imports into the Czech Republic amounted to 170,692 tons in the first four months this year against 180,183 tons in the same period in 2023, with average prices falling from €1881.1 per ton to €1672.6 per ton.  Copolymer imports increased from 68,054 tons to 71,625 tons whilst homo polymer imports dropped from 106,400 tons to 93,937 tons.  Total costs for polypropylene imports totalled €285.491 in January to April 2023 against €338.539 million in the same period in 2022.

Slovnaft polypropylene production 2023

Slovnaft produced 75,440 tons of polypropylene in the first quarter in 2023 against 72,672 tons in the same period in 2022.  Homo grade accounted for over 90% of polypropylene production.  Poland is one of the major destinations for Slovak exports of polypropylene. 

The company is currently investing in the expansion and modernisation of polypropylene production with Linde undertaking the project.  The capacity will be increased to 300,000 tpa from 267,000 tpa.  The revamp will enable Slovnaft to meet rising demands from the polyolefin processing industry.   A further 16 storage silos will be added to the current 45.

Regarding propylene supply Slovnaft commissioned McDermott to expand the cracker.  McDermott will provide comprehensive services and leverage its strategic agreement with Lummus Technology, the licensor of the steam cracker unit.

Hungarian polyethylene trade Jan to March 2023

Hungarian imports of polyethylene dropped from 53,330 tons in January to March 2023 to 50,910 tons in the same month this year.  LDPE imports dropped from 15,106 tons to 12,279 tons whilst HDPE dropped from 24,445 tons to 21,253 tons in January to March this year.

Import costs dropped from €97.276 million for polyethylene imports in January to March 2022 to €88.685 million in January to March this year, with average prices dropping from €1824 per ton to €1742 per ton.  Hungarian export prices dropped from €1474 per ton in January 2022 to €1343 per ton.  Prices have fallen this year due above all to lower demand but also due to flatlining crude numbers.

Export volumes from Hungary amounted to 91,094 tons in the first quarter this year versus 74,664 tons in January to March 2022.  HDPE exports increased from 45,927 tons to 59,904 tons and LDPE increased from 17,952 tons to 25,689 tons.  The rise in polyethylene exports this year has taken place despite the slight decline in production by MOL at Tiszaujvaros.  Exports have been aided by lower demand in the domestic market whereby consumption dropped from around 136,000 tons in the first quarter last year to around 102,000 tons in the same period in 2023.

Hungarian polypropylene trade Q1 2023

Propylene copolymer imports into Hungary amounted to 14,643 tons in January to March this year versus 17,403 tons in the same period in 2022, whilst polypropylene homo grade inward shipments dropped from 33,635 tons to 28,757 tons.  Overall imports of polypropylene dropped from 58,716 tons in the first quarter last year to 49,241 tons in the same period last year.  Due to softening prices import costs dropped from €105.111 million to €79.332 million in January to March 2022.

Hungarian polypropylene exports in the first quarter amounted to 63,177 tons against 70,697 tons in the same period in 2022.  Export revenues amounted to €88.974 million against €117.209 million last year.    

By volume Hungarian homo grade polypropylene exports rose to 34,228 tons from 31,454 tons.  Copolymer exports dropped from 29,141 tons to 24,222 tons.  Overall average prices dropped from €1658 per ton to €1408.

In terms of consumption Hungarian trends in polyolefins reflect the broader European picture of recessionary factors.  Polyethylene recovered slightly in the first quarter against the declines of the third and fourth quarters last year but still remained lower than in Q1 2022.  Polypropylene consumption did not recover in the first quarter and demand remains low. 

HIP-Petrohemija polymer exports Jan-Mar 2023

HIP-Petrohemija exported 29,547 tons of polyethylene in the first quarter in 2023 against 30,117 tons in the same period in 2022.   From 9 June NIS increased its stake in Petrohemija to 90%, while the state of Serbia has a stake of 10%.  NIS is planning the construction of a polypropylene production plant at Petrohemija with a capacity of at least 140,000 tpa, to be constructed within six years.

HIP Petrohemija-NIS integration

Serbian production of polypropylene can no longer keep up with the development of the construction industry, which has created the opportunity for constructing a new plant.   The increased in the share ownership of NIS in Petrohemija from 20.86% to 90% in June this year came with obligations of monetary recapitalization in the amount of €150 million and the construction of the PP plant.   The integration of Petrohemija and NIS represents a fundamental necessity in order that both refining and petrochemicals can coexist and benefit from internal cost advantages.  From the commercial angle the integration with NIS is aimed at enabling Petrohemija to be much more flexible with challenges ahead in the current uncertainties in European petrochemicals.  The political problem is that NIS is majority owned by Gazprom Neft, and it is not clear how Russian ownership of assets will be affected in the future. 

Synthos-expansible polystyrene market 2023

Sales of insulation materials by Synthos fell by 22,000 tons in the first quarter this year against the same period in 2022.   The revenues decreased significantly due to the decrease of selling prices after movement of monomer quotation and decrease of volumes.

Synthos is the largest producer of expandable polystyrene in Central Europe but has come been confronted against weak demand in the first quarter this year following the significant fall in Q4 2022 as construction market experienced a difficult environment. 

The second half of 2022 was particularly affected by low demand as nearly all factors which affect construction demand were negative.  The market is expected by Synthos to continue to be driven by the negative outlook for the new residential and residential renovation sectors although civil engineering is looking still positive.

Hungarian synthetic rubber trade Jan to March 2023

Hungarian imports of synthetic rubber amounted to 38,259 tons in the first quarter this year for total costs of €93.505 million against 37,625 tons in January to March 2022 for total costs of €78.042 million.  Average costs per ton rose in the first quarter to €2444 against €2074 per ton last year.

Regarding export activity, shipments from Hungary amounted to 14,070 tons in January to March this year for revenues of €42.576 million.  Exports of SBRs amounted to 7,934 tons for €26.844 million, supplied from MOL’s plant at Tiszaujvaros, and for butadiene 2,926 tons for €6.342 million. 

Halogenated butyl rubber (HBR) exports from Hungary totalled 1,977 tons for €6.239 million, whilst imports totalled 2,634 tons for revenues of €6.850 million.  Import sources of HBRs were dominated by Russia which supplied 1,714 tons in the first quarter.  Although the sanctions on Russian HBRs to the EU were imposed in July last year the rules were amended in February 2023 when earlier sanctions on synthetic rubber were extended to June 2024.     

Hungarian butadiene rubber imports Jan-Mar 2023

Hungary imported 14,061 tons of butadiene rubber in January to March this year against 12,133 tons in January to March 2022.  The main change to market sources in recent months has come from Indonesia from where Hungary imported 8,594 tons in the first quarter.  Costs of purchases from the Indonesian producer Chandra Asri Petrochemical amounted to €21.989 million from the total import costs for the month which were €33.796 million. 

Imports of butadiene rubber from Russia amounted to 1,612 tons in January to March this year versus 5,379 tons in the same period last year.  EU sanctions on butadiene rubber trade with Russia, introduced in July last year, have since been loosened under the pressure of European tyre manufacturers but this has not led to much of a revival of purchases from Russia.

Synthos production at Oswiecim Jan-Apr 2023

Synthos reduced the production of synthetic rubber from 97,100 tons in the first four months to 81,100 tons in the same period in 2023.

Sales volumes of rubbers for the Synthos Group, including Oswiecim, Schkopau and Kralupy plants, fell in the first quarter by 28,000 tons compared to the same quarter in 2022.  The fall was due predominantly to lower ESBR sales and also lower export sales to Asia.  Exports to Asia were made more difficult following energy price increases in Europe. 

The gap between operating costs and revenues for Synthos narrowed in the synthetic rubber division in the first quarter in 2023, after the significant drop in the fourth quarter last year.  The group was able to record a small but positive operating profit in the first quarter.

Revenues have not changed significantly but the structure is undergoing change with the close of the ESBR plant in the Czech Republic and the restart of the butadiene rubber plant at its Schkopau facility in east Germany.  The butadiene rubber plant was restarted in March partially replace the Russian product which has been sanctioned.  However, tyre manufacturing involves a wider spectrum of grades, many of which are produced mainly in Russia and some grades will be difficult to replace. 

Synthos announced in March that it intended to close the Kralupy plant by the end of the second quarter.  ESBR production is continuing at the Oswiecim plant in Poland.  Even in the first half of 2022, the Kralupy unit was still running at full speed and making money.  However, due to several times higher gas costs, Synthos was no longer able to compete on non-European markets.  More than half of the production was sold in the US and Asia where competitive prices made it very difficult to sell at profitable levels. 

Polish synthetic rubber trade, Jan-Apr 2023

Average prices for synthetic rubber imports into Poland dropped in the first four months to €2155.2 per ton against €2365.9 per ton.  Imports of synthetic rubber into Poland amounted to 90,669 tons in January to April 2023 against 101,300 tons in the same period in 2022. 

Butadiene rubber imports rose from 14,859 tons to 21,937 tons and EPDM imports dropped from 16,599 tons to 14,661 tons.  Synthetic rubber exports from Poland totalled 92,872 tons in the period January to April 2023 versus 111,179 tons in the same period last year.  SBR formed the largest share of exports. 

Czech synthetic rubber market Jan-Apr 2023

Prices for synthetic rubber exports and imports of both synthetic and natural rubber have stabilised since the start of 2023.  Prices for Czech exports of synthetic rubber tend to be lower than import prices due to different product grades, with export prices in April consolidating at €1858 per ton and import prices at €2239 per ton.  Natural rubber prices tend to range at the lower end of synthetic rubber prices but are influenced by different market dynamics. 

Exports of synthetic rubber into Czech Republic amounted to 55,827 tons in the period January to April 2023 against 67,559 tons in the same period last year.  Imports of synthetic rubber amounted to 42,086 tons in the first four months in 2023 against 50,141 tons in January to April 2022, with natural rubber imports rising slightly from 28,011 tons to 29,066 tons.   

Imports of synthetic rubber from Russia into the Czech Republic dropped from 10,973 tons in the first four months in 2022 (for €20.282 million) to 2,337 tons (for €4.264 million).   The largest category of imports from Russia this year was for SBR grades where volumes amounted to 1,169 tons.  Butadiene rubber imports from Russia amounted to 877 tons against 4,698 tons in the same period in 2022, whilst imports of halogenated butyl rubber fell to 102 tons from 1,928 tons in January to April 2022. 

Czech exports of ESBR dropped in the first four months this year to 11,850 tons against 25,705 tons in the same period in 2022.  The plant was closed in April and will not produce in future.  Prices per ton for ESBR dropped slightly from €1782.8 to €1757.4, but according to Synthos production costs have risen to levels where the Kralupy plant is not able to be profitable.   

Czech butadiene rubber trade Jan-Apr 2023

Czech exports of butadiene rubber comprised 36,912 tons in the first four months in 2023 against 37,009 tons in the same period in 2022.  Revenues from butadiene exports dropped from €70.220 million to €67.846 million.  Imports of butadiene rubber amounted to 7,894 tons in the first four months which was down from 9,818 tons in the same period in 2022. 

The largest customer for Czech butadiene rubber is India which took 5,418 tons in the first four months in 2023 against 7,412 tons last year.  South Korea purchased 4,686 tons in the first four months, rising from 2,168 tons.  The largest European consumer for butadiene rubber produced by Synthos at Kralupy was Poland taking 4,888 tons followed by Slovakia with 3,915 tons. 

Polish aromatics trade Jan-Apr 2023

Phenol imports into Poland amounted to 29,132 tons in the first four months in 2023 against 40,001 tons in the same period last year.  Supplies from Russia were sanctioned by the EU and from August no deliveries were made to Poland.   Germany was the largest supplier of phenol to Poland in the first four months, shipping 21,668 tons.

The European phenol market has continued to be affected by lukewarm demand from derivative product sectors.  Lower energy costs have to date not translated into improved demand for phenol.  Moreover, some downstream markets, including BPA (bisphenol A) with derivatives and the polyamide chain, were additionally under the pressure of imports from outside of Europe.

In other aromatic product areas, styrene imports into Poland amounted to 26,981 tons in the period January to April 2023 versus 34,365 tons in the same period in 2022 whilst ethylbenzene imports rose from 38,864 tons to 42,477 tons.  Nearly all of the ethylbenzene imports come from the Czech Republic. 

Poland exported 46,439 tons of benzene in the first four months for €39.634 million.  Average prices dropped from €1019.4 per ton to €849.8.  Germany was the largest destination for Polish benzene exports, taking 35,312 tons against 38,701 tons in the same period in 2022.  Exports of benzene from Poland to the Czech Republic dropped from 19,072 tons in January to April last year to 9,885 tons.

Paraxylene imports into Poland were not required by Poland in the first four months against imports of 20,839 tons in the same period in 2022. 

Polish PTA sales  and production Jan-Apr 2023

PTA production at Wloclawek at 66% of capacity in the first quarter due to weaker demand and extended maintenance.  In the first quarter this year PKN Orlen produced 107,000 tons of PTA against 171,000 tons in the same period in 2022.  As a consequence of lower production and sales, revenues from PTA dropped from €149.9 million in the first quarter in 2022 to €83.4 million in the first quarter this year.  Export revenues more than halved from €103.5 million to €46.9 million. 

The drop in PTA prices in the quarter view resulted from supply and demand factors. Despite production cuts, the availability of PTA on the European market remained adequate, fully covering limited demand, and a cheaper product imported from Asia was also available.

PTA exports from Poland amounted to 64,516 tons in the first four months in 2023 against 146,348 tons in the same period in 2022. 

Average prices for Polish PTA exports amounted to €872.9 per ton in 2022 against €887.3 in the same four-month period in 2023.   Exports to Germany fell from 124,776 tons in January to April 2022 to 53,430 tons in the same period in 2023. 

Central European caprolactam production and trade

Caprolactam production in Poland has dropped since the middle of 2022 due to Azoty’s decision to try to reduce losses by continued plant activity.  Spolana has also lowered production this year which meant that caprolactam exports from the Czech Republic fell in the first four months to 7,404 tons against 15,103 tons in the same period in 2022.  Average prices dropped from €2277.9 per ton to €1915.8 per ton. 

Market conditions across the entire product segment were shaped by demand and supply factors.  The European market has exhibited weak demand for both caprolactam and PA6, and despite lower energy costs it has been difficult for Azoty to produce at full capacity.  The average European contract price of liquid caprolactam fell by 10% and 15% quarter on quarter, while the average quarterly contract price of caprolactam on the broad Asian market went down 20% and 3% quarter on quarter. 

Imports of cheaper PA6 chain products, especially from Asia, further eroded demand for PA6 and caprolactam.

Czech aromatic trade Jan-Apr 2023

Czech exports of ethylbenzene amounted to 42,572 tons in the first four months versus 38,854 tons in the same period in 2022, whilst styrene jumped from zero to 5,050 tons.  Benzene exports were not undertaken in the first four months in 2023 against 18,278 tons in January to April 2022, whilst imports of benzene dropped to 14,144 tons from 27,035 tons. 

Unipetrol operates a benzene plant at Litvinov with a capacity of 250,000 tpa, whilst benzene is also produced in the Czech Republic by Deza at Valasske Mezirici.  Deza also owns Petrochemia at Blachownia at Kedzierzyn Kozle and possesses a combined capacity of 160,000 tpa for benzene and 25,000 tpa for toluene.  Exports of toluene from the Czech Republic amounted to 3,759 tons in the first four months this year.  

Polish organic chemical trade Jan-Apr 2023

Values and volumes for Polish trade in organic chemicals fell for both exports and imports in the first four months, as recessionary trends took effect.  

Import revenues dropped from €1.777 billion in the first four months in 2022 to €1.423 billion in the same period in 2022, whilst export revenues dropped from €819.5 million to €540.8 million.  Volumes for exports dropped from 597,900 tons to 415,400 tons whilst imports fell from 1078,000 tons to 890,000 tons. 

Ethylene glycol was one of the few products showing an increase in imports, rising in the first four months from 17,881 tons in the first four months last year to 32,624 tons in the same period in 2023. 

Belgium was the main supplier, providing 28,846 tons for €18.416 million.  Poland exported 6,138 tons of ethylene glycol in the first four months this year.  Diethylene glycol imports amounted to 10,169 tons in the first four months versus 10,227 tons. 

Methanol imports into Poland dropped from 133,557 tons in the first four months in 2022 to 87,071 tons in the same period in 2023, with volumes from Russia constrained by sanctions.   No further methanol imports from Russia are now legally possible into Poland, with the full sanctions taking effect from 18 June.   The impact is probably one of higher costs on consumers, but markets are being controlled by the war in Ukraine.

Polish solvent imports, Jan-Apr 2023

Acetic acid imports into Poland dropped from 16,205 tons to 12,927 tons in January to April 2023.  The main suppliers to the Polish market this year include the UK, which delivered 2,404 tons versus 4,912 tons in January to April 2022, and the US which increased shipments from 4,911 tons to 6,777 tons.  Average prices for acetic acid dropped from €1176 per ton.

Ethyl acetate imports into Poland fell slightly from 5,295 tons in January to April 2022 to 5,239 tons in the same period in 2023.  Supplies were diversified between Belgium, Germany, UK and the Netherlands.  Vinyl acetate imports into Poland decreased from 6,988 tons in January to April 2022 to 5,630 tons the same period in 2023.  

Hungarian organic chemical trade Q1 2023

Maleic anhydride exports from Hungary amounted to 5,248 tons in the first quarter in 2023 against 6,839 tons in the same period in 2022.  Most of the exports were delivered in liquid form to customers up to 500 km from the Szazhalombatta plant

 Acrylonitrile imports into Hungary amounted to 7,565 tons in January to March this year versus 10,251 tons in the same period last year.  Average prices dropped from €2196.1 per ton against €2092.8 per ton in the first quarter in 2023.   The largest supplier of acrylonitrile to Hungary in 2022 was the Netherlands, accounting for 22,953 tons for €55.452 million.    The Netherlands reduced shipments in the first quarter to 3,871 tons from 6,504 tons.   

Aniline imports into Hungary amounted to 43,128 tons in January to March this year against 31,146 tons in the same period in 2022.  Imports of aniline from China amounted to 10,061 tons whilst other sources included Belgium which shipped 15,052 tons to BorsodChem against 683 tons last year. 

Imports from the BorsodChem Ostrava plant continue to be imported for MDI production in Hungary but dropped in the first quarter to 18,016 tons versus 29,177 tons.

Orlen Poludnie-propylene glycol

Orlen Poludnie has recently concluded the first year of operation of its BioPG plant, converting glycerol, into renewable propylene glycol (BioPG).  BioPG obtained from glycerin is bio-based and a highly demanded product used to produce polyester resins, polyurethanes, paints and de-icing solutions, solvents for the food industry.  It can also be used as an ingredient in deodorant sticks and toothpaste. Compared to fossil-based propylene glycol, BioPG reduces the CO2 footprint by at least 60% whilst offering the same product quality.

Orlen Poludnie utilised BASF’s commercially proven process technology and proprietary H9-66 catalyst.  The BioPG plant supports Orlen Group’s objective of achieving CO2 neutrality by 2050. With an annual capacity of 30,000 metric tons, Orlen Poludnie is the first Polish producer of propylene glycol aiming to meet 75% of the demand for the country's propylene glycol.

PCC Exol Q1 2023

PCC Exol recorded lower sales in the first quarter in 2023 due to weak demand combined with oversupply of surfactants on the market.  The EBITDA profit of zl 32.9 million was down by 38.2% compared to zl 53.1 million in the first quarter of 2022, although the EBITDA was higher by 8.2% compared to zl 30.4 million in the fourth quarter of 2022.  In turn, the net profit amounted to zl 20.3 million and was lower by 48.1% than the first quarter of 2022.  Sales volumes were down by 17,500 tons compared to the first quarter of last year, although were higher than in the fourth quarter. 

PCC Exol produces in two locations, Brzeg Dolny and Plock.  The current production potential capacity is estimated at 139-144,000 tpa including approximately 104,000 tpa at Brzeg Dolny and approximately 35,000-40,000 tpa at Plock, depending on the product range. 

Grupa Azoty ZAK oxo markets

Overall Grupa Azoty’s chemical division reduced sales to €320.3 million in the first quarter against €543.4 million in the same period in 2022.  The EBITDA dropped from a profit of €83.5 million last year to a loss of €13.624 million this year. 

Regarding the plant at Kedzierzyn-Kozle, Grupa Azoty ZAK reduced sales revenues to zl 663 million (€147.7 million) in the first quarter.  Lower sales combined with higher costs resulted in a net loss of zl 169 million (€37.6 million) in the first quarter this year and an EBITDA margin of minus 20.1%.   The Oxoplast segment was the main factor that affected Grupa Azoty ZAK in the first quarter after European markets were complicated by the import of cheaper products plasticizers and oxo alcohols.   The EBITDA margin of the Oxoplast segment in the first quarter of 2023 was minus 14.4%.

A decline in the prices of plasticizer prices was enabled due to lower prices of propylene and natural gas, but demand remained stretched leading to oversupply in DOTP for Grupa Azoty ZAK.  The European market was dominated by much cheaper products of Korean and Turkish origin, using cheaper raw materials from Asia and shipped to Europe under conditions of steeply falling logistics rates.

Central European MDI trade Jan-Apr 2023

MDI imports into the Czech Republic totalled 12,016 tons in the first four months in 2023 against 12,538 tons in the same period in 2022.  Hungary provided the largest share of imports at 4,283 tons followed by Belgium with 3,186 tons.  Average MDI prices rose from €2517.7 per ton to €2728.6 per ton. 

MDI imports into Poland dropped from 55,162 tons in the first four months in 2022 to 46,719 tons in the same period this year.  Hungary and Germany remain the two largest import sources, with overall average prices comprising €2262.4 per ton in January to April 2023 against €2425.1 per ton last year.  The main difference between 2023 and 2022 is that this year prices look to be heading lower.   

Hungarian MDI exports dropped in January to March 2023 to 40,199 tons versus 62,330 tons in the same period in 2022.  Poland represented the largest destination with deliveries amounting to 9,496 tons, down from 11,617 tons, followed by Germany reducing purchases from 5,568 tons to 5,234 tons.  The most notable destination fall came from the US where shipments declined from 15,069 tons in January to March last year to zero this year.  MDI export prices dropped from €2479.9 per ton in the first quarter in 2022 to €2264.3 this year.  

Central European TDI trade Jan-Apr 2023

TDI exports from Hungary amounted to 62,717 tons in the first quarter in 2023 versus 80,972 tons in the first quarter last year, with average prices rising this year to €3110.9 per ton from €2593.1 per ton in January to March 2022.

TDI exports to Turkey amounted to 9,648 tons in the first three months in 2023 against 10,911 tons last year whilst Italy reduced inward shipments from Hungary from 10,992 tons to 8,217 tons.  Polish imports dropped from 9,869 tons to 8,005 tons.  Belgium took 9,484 tons in January to March this year down from 12,814 tons, whilst Romania reduced purchases slightly from 3,873 tons 3,352 tons. 

Hungary remains the largest supplier of TDI to the Polish market, although volumes fell in value from €39.326 million in the first four months in 2022 to €35.542 million in the same period this year.   

Overall Polish TDI import costs declined from €74.425 million in the first four months in 2022 to €71.325 million.  Despite the fall in volumes from 26,904 tons to 22,447 tons average prices for TDI increased from €2757.0 per ton to €3177.5 per ton this year.   European demand for TDI is faced by recessionary trends and slowly declining feedstock costs.  In effect only global capacity constraints can help to sustain prices. 

The production capacity of Polish polyurethane producers is estimated at 210-220,000 tpa. The largest competitors in the Polish market include the CIECH Group, Eurofoam, MZCh Organika and Vita Polymers and CIS.  Another company is Purinova at Bydgoszcz which is both a manufacturer of polyurethane systems and polyester polyols.  The company produces an average of about 25,000 tpa of polyurethane systems and 65,000 tpa of polyester polyols.

Hungarian polyol imports Jan-Mar 2023

Hungarian polyol imports amounted to 13,255 tons in the first quarter this year against 7,709 tons in the same period in 2022. 

Belgium was the largest supplier in the first quarter this year, shipping 8,612 tons.  Major suppliers of polyols to Hungary in 2022 included China with 11,091 tons and the Netherlands with 10,746 tons. 

MOL is currently constructing its new plant at Tiszaujvaros which should have probably been on stream now.  In June MOL fed propylene oxide into the pilot polyol plant and large-scale test production at the base is expected to start in the second half of 2023.  MOL is waiting for European markets to revive before starting production. 

Czech polyol imports Jan-Apr 2023

Czech polyol imports amounted to 16,446 tons in the first four months in 2023 against 14,175 tons in the same period in 2022.  The major sources of imports came from Belgium, France and Germany.  Polyol import costs dropped in the first four months to €18.885 million from €21.437 million in January to February 2022 with average prices dropping from €2789.7 per ton to €2691.8 per ton.

Polish polyol imports Jan-Apr 2023

Polish polyol imports amounted to 45,708 tons in the first four months in 2023 against 55,707 tons in the same period in 2022.  The major sources of imports came from Belgium, Germany and the Netherlands. 

Polyol import costs dropped in the first four months to €101.085 million from €146.280 million in January to April 2022 with average prices dropping from €2625.9 per ton to €2211.5 per ton.  The largest source of imports came from Germany in the first four months, amounting to 10,017 tons against 11,175 tons in the same period in 2022.

Polish exports of polyols from PCC Rokita amounted to 19,378 tons in the first four months this year against 19,519 tons in the same period in 2022, but prices dropped from €2905.5 per ton to €2285.5. 

Revenues from polyol exports dropped from €56.712 million in January to April 2022 to €46.525 million.  The largest destinations for Polish polyol export include Hungary, Italy and Denmark.

Central European methanol trade Jan-Apr 2023

Exports of methanol from Poland totalled 120,455 tons in the first four months in 2023 against 125,026 tons in January to April 2022.  Exports to Germany fell from 36,424 tons to 30,190 tons.  Ukraine has also started to purchase methanol from Poland taking 8,200 tons in the first four months in 2023. 

Other destinations include the Czech Republic where Polish exports dropped from 26,611 tons to 22,092 tons whilst deliveries to Austria dropped from 26,566 tons to 23,300 tons.   

Imports of methanol into Poland totalled 221,910 tons in January to April 2023 versus 302,873 tons in the same period in 2022.   The average price for Polish imports comprised €298.1 per ton in the first four months against the average price of €368.9 per ton in January to April 2022.  

Russia reduced exports to Poland in January to April 2023 to 146,917 tons from 229,966 tons.   The EU embargo on Russian methanol took full effect from 18 June.  Norway shipped 23,149 tons in the first four months to Poland whilst Germany reduced exports to 15,004 tons from 38,026 tons.  Import prices averaged €368.7 against €298.1 per ton for exports.

Czech imports of methanol amounted to 25,888 tons in the first four months in 2023 against 26,804 tons in the same period in 2022.  Russia accounted for 4,062 tons in January-April 2023 against 12,697 tons in 2022, followed by Poland which increased from 10,924 tons to 17,212 tons.  Average prices for methanol imports dropped from €432.169 per ton last year to €390.224 per ton.

Hungarian imports of methanol totalled 22,226 tons in January to March this year versus 25,784 tons in January to March last year.  Prices averaged €467.6 per ton in the first quarter this year against €441.8 per ton in the same period in 2022.  Imports from Russia were not undertaken in January to March this year against 10,763 tons in 2022. 

The drop in exports from Russia was due to war in Ukraine and the difficulties in shipping product by rail.   The disruption to rail shipments has also affected imports from Slovakia where volumes declined from 6,468 tons to 3,005 tons.

Ukrainian methanol supply

The Ukraine Support Task Force, managed by the Energy Community Secretariat, announced the delivery of a donation of 2,000 tons of methanol in May.  The product came from Equinor to the largest Ukrainian gas producer Ukrgasvydobuvannya (UGV), a subsidiary of Naftogaz Group.

Orlen-Pulawy plant acquisition?

PKN Orlen is considering the possible acquisition of Grupa Azoty Pulawy in order to gain a competitive advantage in the fertiliser industry in Central Europe.  On 6 June Grupa Azoty announced that a confidentiality document information between GA Pulawy, PKN Orlen and Grupa Azoty. in connection with the intention to commence talks regarding a potential acquisition by PKN Orlen. Grupa Azoty may be ready to sell some assets after a very difficult first quarter, although there may be some opposition to the deal going through.   Combining the Pulawy plant with Anwil at Wloclawek would increase Orlen's potential in this industry, and increasing the potential means that Orlen could compete on price.

Grupa Azoty first quarter losses in 2023

Grupa Azoty recorded a loss in EBITDA of €31.060 million in the first quarter against a profit of €180.563 million in the same period in 2022.   Sales revenues in the fertiliser sector dropped from €1423.9 million in January to March 2022 to €884.6 million in the same period this year.   Revenues overall for Grupa Azoty dropped by 42.9% in the first quarter from zl 3.895 billion against zl 6.827 billion 827 million.  Grupa Azoty expects that the market situation to improve from the third quarter of this year.  The group is currently in talks with PKN Orlen on a new gas supply contract, the current one is valid until the end of September.  In April this year, Grupa Azoty's production of nitrogen fertilisers fell to 176,312 tons from 555,2023 tons a year earlier.

Ciech Jan-Mar 2023

Ciech’s results were slightly weaker in the first quarter than last year but still the group was able to report an EBITDA of €48.1 million against €50.9 million in the same period in 2022.  Revenues rose from €275.5 million to €383.6 million whilst production costs rose from €216.0 million to €325.1 million.  The operating rate of €21.546 million versus €29.128 million was considered to be solid considering the economic problems facing Europe at present. 

In terms of product revenues dense soda ash was the largest source of earnings in the first quarter, amounting to €128.683 million versus €88.915 million in the same period in 2022.  Light soda ash sales amounted to €27.512 million against €23.894 million whilst sodium bicarbonate sales rose from €14.300 million to €18.704 million.  In other product areas sales of pesticides dropped from €54.350 million to €35.077 million and polyurethane foam sales dropped from €21.677 million to €17.894 million. 

Ciech’s soda ash capacity in Poland stands at 1.450 million tpa, with another 610,000 tpa at Ciech’s plant in Germany and 540,000 tpa at Ciech Soda Romania.   Currently, Ciech's plant in Germany at Stassfurt is capable of producing up to 50,000 tpa of high-grade sodium bicarbonate, with an overall capacity of 110,000 tpa. 

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