Unipetrol said its statement yesterday that technical deficiencies forced it to shut down production at its two petrochemical units until October 20. The unexpected shutdowns had to be made yesterday at main production units at subsidiaries Chemopetrol AS and Ceska Rafinerska due to the technical problems at a steam cracker in a new hydro-cracking unit.
Our view: Although Unipetrol claims that the negative impact of the shutdowns will be "minimized'' by the use of accumulated supplies of raw materials, we disagree. Production volume of the steam cracker will be at least 15% lower in 4Q06 (two weeks of production falls out), which could hurt profits in a period when petchem margins are relatively healthy. Thus, we consider the news as negative, especially as Chemopetrol is the most profitable unit of Unipetrol group.