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BorsodChem signs to buy Polish benzene and toluene producer

By Liz White, UT staffKazincbarcika, Hungary-BorsodChem Rt signed an agreement 6 Oct with Ciech SA of Warsaw to buy the Polish group’s subsidiary Petrochemia Blachownia SA.Kazincbarcika-based BorsodChem makes polyvinyl chloride, as well as the two isocyanates methylene diphenyl diisocyanate (MDI) and toluene diisocyanate (TDI), while Petrochemia Blachownia makes benzene and toluene. “The acquisition fits well with our company’s strategy that has been carried out systematically over the recent years and aims to transform the product portfolio, since benzene and toluene produced by Petrochemia Blachownia are the base materials for polyurethane chemical plastics MDI and TDI,” said Borsodchem’s announcement on the acquisition. The deal is subject to approval by the Polish Competition Office. Discussing Borsodchem’s strategy and the advantages of adding Petrochemia Blachownia at a 6 Oct press conference, László Kovács, Borsodechem’s ceo, listed economies of scale, technological synergies (double use of chlorine), use of the full-value chain and vertically integrated PVC, MDI and TDI production with synergistic links. The expanded Borsodchem would serve the growing markets in central and eastern Europe, from a competitive raw material purchasing position in the region. The location offers low-cost infrastructure and servicing plus a well-educated, low-cost workforce, Kovács added. Using raw materials from Petrochemia Blachownia will; help BorsodChem achieve its aim of raising MDI capacity to 160 kilotonnes per annum by 2006 (from 70 ktpa in 2005 and 60 ktpa in 2004), and TDI capacity to 90 ktpa from 80 ktpa currently. The group has successfully expanded aniline capacity (by its BC MCHZ unit) to 100 ktpa from 110 ktpa, with a pilot run successfully completed 1 June. A 100 kpta MDI unit is under construction with the first pilot run scheduled during October, Kovács added. In 2005, Bordsochem’s total capital expenditure for the site will be HuF 42 000 million ($198 million), he added. Kovács pointed out that MDI prices are currently at record levels and crude MDI demand is stronger than that of pure MDI. But new Asian and European capacities are also coming on stream and prices may level off, he added. In TDI, he said, prices have been eroded as slight overcapacity has developed globally, but some restructuring (capacity shutting) has been seen and prices are climbing upwards, he added. The picture shows the BorsodChem chemicals site at Kazincbarcika by night. “

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