SABIC’s CEO says product prices remain ‘challenging’

Yousef Al Benyan, CEO of Saudi Basic Industries Corp (SABIC), said product prices are still “challenging” for the company, amid no improvement in supply and demand for key products in Q1 2020, when compared to the previous quarter.

The situation has become more complicated as the coronavirus pandemic turns into a global crisis, and Brent crude prices saw a steep decline.

“SABIC is maintaining its cost control policy. The company suspended all forms of capital expenditure, except when necessary to ensure the highest safety standards in operations, as well as performance efficiency and reliability,” Al Benyan said, noting that projects in final stages were excluded from the suspension.

Moreover, Al Benyan expressed confidence in the strength and resilience of supply chains, confirming readiness to tap available growth opportunities in the long term, based on sustainability and innovation.

In its financial statements, SABIC said that the global gross domestic product (GDP) will see a negative growth in 2020, hit by the fallout of the COVID-19 pandemic.

Despite the slight improvement in China’s business, the downturn faced by various countries worldwide due to suspension of business activities and lockdowns will impact demand in Q2 2020, and could continue throughout the year.

Meanwhile, global oversupply will add pressure on product prices and profit margins, SABIC added.

The petrochemicals giant reported a net loss after Zakat and tax of SAR 950 billion for the first quarter of 2020, compared to a net profit of SAR 3.4 billion in the same period last year.