EMIS Emerging Market Information Service EMIS - Chemical Sector Poland

Sector Highlights Sector & Economy The continued economic slowdown is likely to curb the growth of the chemical sector’s revenue - both from domestic sales and exports - especially due to lower demand from the construction and automotive industries. The chemicals and chemical products industry was the third highest growing industry in terms of production levels in 2012 (up by 7.0% y/y). Base chemicals comprise around 60% of chemical output in Poland, while processed chemicals are mostly imported. Gas Prices The chemical sector is the largest consumer of natural gas in Poland – the biggest chemical company, Grupa Azoty, alone uses 1718% of Poland's total gas consumption. Even though natural gas prices were significantly lowered (by 3%) in early 2013, they are still high compared to other countries, and thus bound to drive the sector's financial results downwards. Not surprisingly, chemical plants are taking up efforts to diversify the sources of their gas supplies (At the moment they primarily source from Poland’s main gas provider PGNiG). Exports/ imports The chemical industry is the second-largest player in terms of foreign trade: in 2011, its share in the value of the country's total exports was 13.8% and in imports - 17.5%. At that time, the exports of rubber and rubber products rose by 29.5% to EUR 3.7bn (it translated into 2.7% of Poland's total exports); the exports of organic chemicals rose by 46.4% to over EUR 1.4bn (or 1.0% of total exports); the exports of plastics and plastic products rose by 16.6% to nearly EUR 6.0bn (or 4.4% of total exports). In H1/2012, total exports of the chemical sector rose by 4.2% y/y to EUR 9.6bn, and that of imports was down by 5.5% y/y to EUR 12.9bn. The trade deficit in the sector stands for 70% of Poland's total foreign trade deficit. Any redistribution of this information is strictly prohibited. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. -4-

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