Poland Chemicals Report 2009

The chemical segment in Poland is largely state-controlled, but the government is making moves to make the sector more competitive. The Polish government has revived its privatisation efforts and is aiming to exit the chemicals sector - in which it operates 19 firms - by 2011. It is seeking foreign buyers, although the global economic downturn threatens to derail the privatisation drive. Industry observers also note that many plants are either too complex or lack the international scale needed to interest overseas investors.

Local production has not increased substantially during the past few years.

Business Environment Poland attracted an estimated EUR12bn in foreign direct investment in 2008. However, foreign direct investment in Poland could tumble nearly 17% to EUR10bn in 2009 as a result of the downturn in the world economy. Poland's slowing economic growth also will be a factor that influences foreign direct investment over the near term. With eurozone consumption cooling and international credit markets remaining tight, it is believed momentum for the economic growth cycle will be distinctly lacking.

Industry Developments Ciech ? which has formed a consortium with Azoty Tarnow and ZA Kedzierzyn to buy Anwil from PKN Orlen ? has said that the purchase of Anwil could be delayed until Q309. PGNiG is considering acquisitions in the chemical and power sectors. German firm Petro Carbo Chem (PCC) also is eyeing targets in the Polish chemical sector. PKN Orlen aims to invest US$1.4bn over the next five years to double its petrochemical production, and wants to become a key supplier for Polish chemicals firms.

Fertiliser firm ZA Pulawy intends to reduce its capital expenditure in the 2009 fiscal year because of the economic downturn. State-owned Azoty Tarnow failed to sell all of its planned shares in its initial public offering. Demand for the privatisation offering was low, and other state-run firms ended up picking up shares.

EU REACH Regulation The European Chemicals Agency (ECHA), which governs the registration, evaluation, authorisation and restriction of chemicals (REACH) process, published in June 2008 an initial list of 16 candidate substances to come under the authorisation of REACH. Member states also have the right to nominate additional substances to the official candidate list. The European Trade Union Confederation (ETUC) unveiled its own proposed list in March 2009. The European Chemical Industry Council (Cefic) criticised the ?Trade Union Priority List for REACH Authorisation,? saying the ETUC had no authority to publish such a list. Poland?s deadline for meeting REACH stipulations has been set at 2011.