SABIC able to deal with supply chain crisis as cost increase is 'marginal': CEO

SABIC Vice Chairman and CEO, Yousef Abdullah Al-Benyan

Saudi Basic Industries Corp. (SABIC) has the ability to deal with the challenges of the global crisis of supply chains and shipping through the business model it applies and contracts with service providers, Vice Chairman and Chief Executive Officer (CEO), Yousef Abdullah Al-Benyan told Argaam.

Al-Benyan expects situation to return to normal by the end of 2022.

The increase that resulted from the impact of supply chains on the company ranged between $50 to $80 million during the last period. The impact of increase on other companies reached 250% in the supply chains.

Accordingly, the cost of supply chains at SABIC was marginal, Al-Benyan stressed.

He indicated that the average prices of propane and butane feedstocks increased by about 20% and 22% quarter-on-quarter (QoQ) in Q3 2021, as Aramco supplies SABIC and other companies with feedstocks based on specific international prices. Thus, SABIC does not have the right to control these prices.

On a quarterly basis, prices of some major products rose during Q3 2021, as methanol grew by 10% and mono-ethylene glycol (MEG) by 4%, against a decrease in polypropylene and polyethylene by 7% and 8%, respectively.

SABIC's presence in key regions around the world, its contracts with supply chain service providers and ships, availability of tanks and marketing offices, and its proximity to customers, greatly mitigated the cost impact.

According to data compiled on Argaam, SABIC achieved profits of SAR 18.1 billion in the first nine months of 2021, against losses of SAR 2.2 billion in the same period a year ago. It reported a net profit of SAR 5.6 billion in Q3 2021.