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Romania's Oltchim Slashes Output to Cut Costs

8:58 AM MDT | August 9, 2011 | Ian Young

Oltchim (Ramnicu Valcea, Romania) says it will cut its output to 30% of nameplate capacity during the month of August to cut costs because the company cannot finance its working capital. Oltchim has faced steep rises in raw material costs this year. The company announced the measures in a statement today to the Bucharest stock exchange, also saying that 1,025 of its employees, approximately one-third of its workforce, will receive 80% of their salaries for the next 20 days. Further details were not disclosed. Oltchim makes a range of products including chlorine...

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Comments (1) for Romania's Oltchim Slashes Output to Cut Costs
We have been co operating with Oltchim since 2003 and have been present on the Romanian market since 1965. Sepulchre Company is headquarterd in Brussels and by far not the largest but one of the oldest Belgian partners of the Central European Chemical Industry.

Romania is the second largest market in Central Europe. It now is legitimately attracting the attention of foreign investors. For Romanian s natural resources , for it s geographical position but also for it’s creative , dynamic , educated and young human resources.

Oltchim is a key player with the Romanian Chemical industry. Responsible for employing a wee bit more than 8.000 people. Directly and indirectly.

With 300.000 MT PVC capacity in the very heart of a market that spreads from Romanian borders across to Bulgaria, Turkey , Serbia and Croatia . Besides Borsodchem in Hungary , there are no other neighbouring PVC producers in the area. This alone seems to be an asset.
Large industrial investments were made to meet the coming challenges.

Furthermore, Oltchim diversified it s core PVC activities to other areas such as Polyether Polyols for the polyurethane Industry. It now runs at 90 pct of 100.000 MT capacity. Oltchim Polyols are well known from major European PU foam producers.

I travel in most of Europe as well as in Asia. I lived in Canada & travelled extensively in the US. Romanian conditions are tough and Romanian people hard workers. We have too many clichés about Romania. In Oltchim as well as in many other Cies in the country, people do not count hours and are happy / proud to have a job. Civil servants were asked in 2009 to reduce their income of 25 pct . There were street protests of course but no riots. No hard and painful strikes for the Public.

Oltchim was cut off from it s main feedstock ( Ethylene ) when the Pitesti Petrochemical and Refinery was sold to Austrian OMV in 2006 ( 2005 ? ) . Ethylene was indeed piped directly into Oltchim until OMV took over & gradually shut the petrochemical units down, including the pyrolisis that produced Ethylene. Again, Oltchim was forced to buy Ethylene and Propylene at spot prices on market. Logistics costs were killers. For the past year, Oltchim s management have struggled to buy the Pitesti pyrolise back . They almost completed the process and had started to pipe feedstock from Pitesti to Oltchim .

Meanwhile OMV stopped the refining unit and basically abandoned Pitesti site. .Forcing Oltchim to stop their cracker unit and letting 500 people go to the chomage technique.

I have never met and don’t know Mr Constantin Roibu , General manager .We are operational folks and talk to the production, technical and marketing staff. I am not paid to write those comments.

I am sad and outraged to see how easy it is to attack and destroy a Company that survived the post communist era. Losses are indeed there. 2008 financial crisis obviously did not support the expected ROI.

But in who s interest is it to spread rumours and destroy Oltchim s reputation and efforts even further. Is this in the interest of the 8.000 people who would loose their job is Oltchim goes down ? Or is to the benefit of the Romanian government. Why have PCC , minority shareholder and Oltchims competitors , been so aggressive. Using means and funds that are not available to Oltchim if they want to answer back .

Yes, Oltchim produce losses. Yes there must be some restructuring in order to valorise the largest Independent chemical producer in Romania and make it profitable again. Will the OMV scenario also apply to Oltchim ?

Lawrence G Sepulchre
Posted by Larence Sepulchre on Thursday, August 11, 2011 @ 10:22 AM

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