Romania’s petrochemicals and plastics output rose by 12% last year, according to estimates by Business Monitor International (BMI, London / UK; www.businessmonitor.com). Output contracted in the first quarter of the year but recovered in the following months, the market research company said.

The country’s petrochemicals industry will be supported in the coming years by rising demand from the construction and automotive sectors. BMI said it is optimistic about the domestic and external outlook for petrochemicals over the medium-term, thanks to foreign investor interest in downstream industries, including automotive. Romania’s export-oriented automotive sector is expected to undergo a solid recovery in 2011, boosting demand for engineering plastics and PP in particular. “We see the pace of vehicle production picking up rapidly with Ford Motor’s Craiova plant in operation and local Renault subsidiary Automobile Dacia expanding output,” BMI stated in a report on the Romanian petrochemicals sector. Nevertheless, there are likely to be further challenges to the automotive industry in the wake of the eurozone debt crisis. Fiscal austerity measures are expected to dampen consumer demand in major export markets, BMI said.

Romania’s construction sector contracted in 2009 and again in 2010, resulting in a fall in demand for PVC, HDPE and other polymers. However, BMI expects the construction market to recover by 4.3% in 2011 and 7.5% in 2012. Improvements this year should reactivate the construction sector’s consumption of plastics, and growth should gradually accelerate over the forecast period to 2015, it said. This much-needed boost to the chemicals industry will outweigh the more sluggish growth in demand from eurozone export markets, it added.

Problems with public investment projects could impact the construction industry, BMI warned. “If the recession drags on longer than expected, Romania will find it even more difficult to fund public investment projects, translating into a sharper decline in construction sector activity in 2011,” it said. This would have knock-on effects in segments dependent on construction activity, particularly PVC, it added. A sustainable recovery in Romania’s economy is not expected until the second half of this year, the report said. “While a weaker currency will bolster the export sector and a limited private sector debt load will support domestic spending, we nonetheless warn that the government’s fiscal consolidation programme could significantly weigh on the pace of the broader economic recovery and, therefore, the fortunes of the Romanian chemicals and petrochemicals industry,” it added.

The country’s petrochemicals sector requires a massive amount of investment to improve operating efficiencies following years of under-investment, said BMI. However, investment in new PE capacity by Rompetrol (Navodari / Romania; www.petrochemicals.ro) and the privatisation of Oltchim (Rîmnicu Vîlcea; www.oltchim.ro) could provide opportunities for greater long-term stability, it added. Rompetrol is increasing its HDPE capacity in Navodari from 60,000 t/y to 100,000 t/y by March 2011 – see Plasteurope.com of 06.04.2010. The expansion marks a reversal of the contraction in operational capacity seen in recent years, said BMI. The Romanian government is progressing plans to privatise Oltchim, which acquired the Arpechim petrochemical unit (now Petrochemical Arges) of Romanian oil group Petrom (Bucharest / Romania; www.petrom.com) in early 2010 (see Plasteurope.com of 05.01.2010). The Economy Ministry has said it intends to divest its 54.79% stake in Oltchim in 2012.

According to Plasteurope.com research, Romania has capacity to produce 700,000 t/y of standard thermoplastics. The country’s total LDPE capacity stands at 110,000 t/y, divided among Petrochemical Arges (80,000 t/y) and Rompetrol (30,000 t/y). These two domestic players also make up the country’s 60,000 t/y HDPE capacity, each accounting for half. In addition, Rompetrol has capacity to produce 80,000 t/y of PP in the country. Last but not least, Romania’s impressive PVC capacity – some 450,000 t/y – comes courtesy of Oltchim.