Unipetrol Approves Expansion of Monomer Production

Unipetrol AS will invest ``hundreds of millions of koruna'' to expand production at its Litvinov unit. The projects were approved by management earlier this month and are to be completed in 2010. The company will select builders by the end of this year. The investment will expand production of monomers at the Litvinov facility, about 100 kilometers (60 miles) northwest of Prague, enabling the refiner to make new types of petrochemical products, according to the statement.

Our view: The outlook for petchem industry is rather dull from this point of view. If concerns on potential slowdown of the world economy prove to be true, petchem industry will suffer among others. Moreover, we believe that we are on the top of the cycle now and the direction could be only down from today. Therefore, though we recognize the importance of further upgrades on company’s assets, the return on the investment might be under pressure. Since the potential upgrade was already announced on the market, we believe the news should have a neutral trading impact on today trading.