Looking East for Chemicals blog shifting to ICIS platform

My Looking East for Chemicals blog is shifting to become an ICIS blog. Please add the following link to your favourites: http://www.icis.com/blogs/east-european-chemicals/. Thanks for your interest. I hope to give you even more on chemical industry strategy and events in central and eastern Europe and elsewhere on the new site. All Blogger entries have been transferred. Many thanks from Will Beacham, ICIS Chemical Business Deputy Editor and London Bureau Chief.

Chemical industry poised for recovery in Central and Eastern Europe

Survival is the name of the game for Central and East Europe’s (CEE) chemical industry over the next few years. Huge challenges remain:
- Poor domestic and regional economic growth
- Lack of state intervention to shore up economic recovery: many countries have no resources to do so as they are nearly bankrupt
- No state money to rescue ailing chemical companies
- Sluggish recovery in export markets
- Inefficient and small companies which cannot compete globally

Is the region better placed for recovery than western Europe?

- Large parts of CEE are landlocked and therefore less exposed to competition from Middle East imports
- Economic growth, when it comes, has the potential to be fast and strong
- Higher oil prices will fuel recovery in Russia
- Privatisation could yield great results in Poland

My view? This region has great potential and with good corporate leadership it will recover strongly. Good corporate leadership is not consistent across the region and more consolidation is vital.

Asian takeover of BorsodChem?

An investor from Asia is reportedly eyeing Hungary's pvc maker, BorsodChem. According to realdeal.hu, an Asian investor has been buying up tranches of the East European chemical company's debt.

This is worrying for the comapny's CEO, Wolfgang Buchele, who is worried that the group's technology may be exported and his plants shut down. This all has echoes of the early 2000's, when rumours flew around about a stealthy Russian takeover of the group. It is quite near the border with Ukraine and pipelines link it to that country. It seemed at the time a natural target for Russian petrochemical companies looking for access to Europe.

From the Asian story: An Asian investor may have "bought a significant part of BorsodChem's mezzanine loans with the involvement of investment banks could be a source of uncertainty at the Hungarian chemicals company as the investor has not yet informed BorsodChem in writing of its role, chairman-CEO Wolfgang Buchele told [Hungarian news agency] MTI on Monday in Kazincbarcika.

"We see hostile intentions in the events because if interests were mutual, there would be no need to involve investment banks," Mr Buchele said. He added that BorsodChem's central strategy had always been to use its cutting edge technology to become one of Europe's leading isocyanate makers: if this technology goes to Asia, Hungary would not only lose a production unit, but the chance of further developments, and ongoing investments would be halted.

The management of BorsodChem, which is deep in debt, has been in talks with the government on a loan from the state-owned Hungarian Development Bank (MFB).

BorsodChem was profitable in both June and July because of favourable market conditions, but also because of cost-cutting measures, Mr Buchele said. Costs were reduced without making mass layoffs, he added."