Feedstock prices in Saudi Arabia no longer ‘the best’ worldwide, says Tasnee CEO

Mutlaq Al-Morished, CEO of National Industrialization Co. (Tasnee), said that feedstock prices in Saudi Arabia are no longer the best worldwide, as the US shale gas industry offered competitive prices.  

Saudi Arabia’s propane prices are correlated with Japan’s propane, the highest among the world’s markets, Al-Morished told Argaam in an exclusive on Thursday.
 

This pushed the US propane prices lower, due to the development of the shale gas industry and more competitive for many Saudi and GCC companies.
 

“Accordingly, Saudi Aramco should reconsider linking the propane prices to the average price indexes in different markets or to the US index,” Al-Morished said. 

Answering a question about Tasnee’s Q2 2020 losses, Al-Morished said the majority of these losses were attributed to the revaluation of some assets, explaining that they are book losses.  

Al-Morished added that he hopes to see better commercial and economic conditions, so that high feedstock prices may reflect on end products in the near term. 

On the other hand, Fawaz Alfawaz, Executive Finance VP, said that a decline in finance costs and the Zakat provision, as well as higher other income. Moreover, the book (non-cash) losses stemming from asset revaluation and the gains realized in H1 2019 from the sale of Cristal, the negative impact of lower average selling prices also pressured the first-half net losses.  

The H1 2020 figures were also battered by a decrease in the company’s profit share from associates and joint ventures, higher general and administrative expenses, and impairment in the non-current assets of Tasnee’s subsidiary, Advanced Metal Industries Cluster Co.  

Meanwhile, end product prices saw a marginal rise, on increased propane prices amid higher oil prices in the second quarter of the year.  

The increase in oil prices was equal to that of feedstock costs, Alfawaz added. 

Tasnee trimmed net losses after Zakat and tax by 75.4% to SAR 265.3 million for the first half of 2020, from SAR 1.08 billion a year earlier.