After more than a decade of exceptionally high annual growth rates of around 10-20%, Czech rubber and plastics processors experienced a setback in 2008. Germany Trade and Invest (gtai, Berlin / Germany; www.gtai.de) reports that the sector’s sales receded by 5.3% to CZK 189.4 bn (around EUR 7.3 bn) as a result of the economic downturn in the fourth quarter. The impact of the crisis was even more pronounced in the first half of 2009. While the output index slipped 0.6% year-on-year in the fourth quarter of 2008, it was down 18.5% in the first quarter of 2009 and 16.7% in the second quarter. No full-year forecasts are available.

Despite the setbacks, the sector remains important for the Czech economy. It employs around 78,000 workers (down from 86,000 at year-end 2008) and accounted for 6% of the country’s industrial sales last year. Experts attribute this strong standing to the fact that the economy was booming until the crisis first hit, and to high capital spending as well. EUR 1.6 bn in foreign direct investment has been channelled into the Czech rubber and plastics processing sector since 2002. The country’s most important trading partner is the EU (85% of exports and 86% of imports), with Germany accounting for the lion’s share (CZK 81 bn trade volume in 2008).

Czech rubber and plastics processors have been severely hit by the recession in the automotive, construction and electronics sectors. The picture is more mixed in the packaging segment. While the downturn has left its mark on technical and transport packaging, food packaging is proving more resilient.

While the Czech economy’s downturn seems to have bottomed out with several positive reports, gtai does not see any signs of a sustained rebound. Although the agency does not track order intake in the plastics and rubber processing sector, the order situation in the industry’s two main markets can act as a clear indicator. Orders in the automotive sector plunged nearly 30% in Q1 2009 and 16% in the second quarter. The economic crisis has hit this sector particularly hard because of competition from Romania, where wages are lower. In the computer and electronics industry orders were down 15% in the first quarter and 17% in the second quarter. Overall, the Czech industry reported a drop of almost 25% in orders in the first six months of 2009.

Nevertheless, companies are cautiously optimistic about 2010. The general sentiment is that, due to their status as suppliers to major industries, rubber and plastics processors will benefit once the economy picks up. One of the sector’s strengths, according to gtai, is its ability to attract foreign strategic players and a sound supply of starting materials for primary polymers and synthetic rubber, supplied by Unipetrol (polyolefins), Synthos (PS and EPS), Spolana (PVC) and Spolchemie (unsaturated resins). gtai estimates that the combined output of these companies stood at around 1.2 m t in 2008. Among the sector’s weaknesses are the relatively low proportion of advanced plastics products, little specialisation and complete dependence on imports of natural rubber and many plastics for the construction sector.

Further details of plastics processing in the Czech Republic with data on 607 converters – 496 in the Czech Republic and 111 in the Slovak Republic – can be found in “Plastics Processing in Czech & Slovak Republics 2009”, published by market research company Applied Market Information (AMI, Bristol / UK; www.amiplastics.com) – see Plasteurope.com of 11.09.2009.