Saudi Petrochemical Companies Well-positioned to Gain -Al-Ahly Capital Announce

Petrochemical companies in Saudi Arabia are well positioned to cover supply gaps and take advantage of higher prices, which could lead to strong fourth-quarter results in 2021, despite the fact that the petrochemical industry has been in turmoil around the world due to supply problems, NCB Capital announced.

China’s major gas and new energy initiatives have had an impact on overall industrial output, it stated, adding that gas, oil, urea, methanol, and polymer prices all rose g as a result of these variables, especially near the conclusion of the month.

On the other hand, the Advanced Company achieved better-than-expected results in the third quarter of this year, with net income of SR218 million, a decrease of 17.7% on a quarterly basis, which is thought to be the result of high raw material costs and lower net profits from polypropylene, despite higher employment rates.

Despite the fact that petrochemical businesses are projected to disclose profit declines on a quarterly basis, the findings are modestly encouraging.

Natural gas supply problems around the world worsened in September 2021, according to “Al-Ahly Capital,” as the price of natural gas increased by 28% (compared to last year) to $5.6 per million British thermal units, while prices in Europe reached record highs of more than $20 per MMBtu.

Lower inventory levels, higher-than-expected weather-related demand in Europe, and strong demand from Asia are all contributing to these significant price rises.

Major petrochemical and fertilizer businesses were compelled to restrict production due to rising gas prices and limited supplies, pushing methanol and urea prices to multi-year highs. Urea prices were over $800 in certain locations, while methanol prices topped $400 for the first time in three years.

China’s dual control policy, which has resulted in power shortages and the closure of several petrochemical facilities, was recently launched by NCB Capital to limit the intensity of energy usage.

China has turned from exporting to importing major petrochemical products as domestic production has shrunk, and this, together with high oil costs, is projected to support polymer prices in the near future.