Czech Republic Chemicals Report 2009

Industry Overview The chemicals industry is the third largest industry in the Czech Republic and employs about 115,000 workers. Basic chemicals constitute 60.5% of the total Czech chemicals industry, followed by pharmaceuticals and related products (making up 10.3% of the total chemicals industry), soaps detergents, cosmetics and perfumes on 10.3%, other chemicals 4.6%, while man-made fibres and agrochemicals accounted for 1.5% and 1% of the chemicals industry, respectively.

Implementation Of GHS The Globally Harmonised System of Classification and Labelling of Chemicals (GHS) – agreed by the UN Economic and Social Council – concerns the harmonisation of safety materials on hazardous chemicals. Although the first publication of GHS guidelines for the Czech Republic is expected in 2009, the regulations will be enforced gradually. The transition period under which the old legislation is phased out and the new legislation is implemented begins in 2010 for chemical substances (ending in 2015) while the start date for chemical preparations/mixtures is 2017.

Industry Developments In October 2008 Czech Business News reported that Czech chemical company Spolchemie was planning to build a US$54mn epichlorohydrin (ECH) plant in Malaysia. The facility would be Spolchemie’s first investment overseas and it is expected to be followed by the construction of another ECH plant in the Americas. There has been strong growth in demand for epoxy resin in recent years, especially in emerging economies. Spolchemie’s Malaysian plant will be ideally located to supply the rapidly expanding markets in India and Malaysia. ECH is used as a raw material in the production of epoxy resins, plastics and other polymers.

Industry Outlook The chemicals sector is heavily reliant on the economic performance of key markets in the eurozone.

Germany accounts for 44% of overseas chemicals sales for the Czech Republic and with the country falling into recession, Czech chemicals producers are struggling to maintain orders.

The Czech chemicals sector is dominated by producers with an export focus. This means that the industry will not be able to rely on domestic consumption to replace export losses. Despite this, the report forecasts that exports will grow by a compound annual growth rate (CAGR) of 9.66% in 2008-2013. Domestic consumption, by contrast, is forecast to grow at a CAGR of 3.28%.