VINACHEM

PRAGUE (ICIS)--Czech producer Unipetrol is set to record a strong petrochemical performance for the first quarter after margins returned to growth, investment bank Wood & Company said on Tuesday.

After suffering a dip last December on sharply rising feedstock costs, Unipetrol's integrated petrochemical margin rose in each of the following three months, delivering an average of €626/tonne ($894/tonne) for the first quarter of 2011, according to the bank.

This was up 17% on both the previous quarter and the first quarter of 2010, Prague-based Wood & Company added.

“The external macro environment is pointing towards a strong result for the petchem segment, since the model margin has climbed close to the previous cycle’s peak of €700/tonne seen in 2006-2007,” said Jan Tomanik, an analyst with the bank.

For the first quarter of 2011, Unipetrol’s model monomer margin rose to €345/tonne from €255/tonne in the fourth quarter of 2010 and €278/tonne in the first quarter of 2010, the bank said.

Tomanik added that Unipetrol's monomer margin has rebounded from the temporary drop in the fourth quarter of 2010, when sharply rising feedstock costs –such as the 15% increase in the price of naphtha compared with the previous quarter –squeezed the company's margins.

The company’s model polymer margin for the first quarter of this year edged up to €281/tonne from €278/tonne in the previous quarter and €257/tonne in the first quarter of 2010.

Unipetrol is 63%-owned by Poland’s PKN Orlen.

In February, an analyst with Raiffeisen Centrobank said that Unipetrol was struggling with what could turn out to be a lengthy decline in olefin margins.