Petchem market sees weak demand; selling price down 5%: SABIC

Logo of Saudi Basic Industries Corp. (SABIC)

The global petrochemical market continues to witness lower demand and higher supply for most products, Saudi Basic Industries Corp. (SABIC) said in a statement post-publishing Q3 2023 results.

SABIC, however, was able to boost its sales volume by 7% quarter-on-quarter (QoQ) in Q3 2023, despite the economic difficulties.

The weakness in demand led to a decline in the average selling price by 5% on a quarterly basis, while the prices of agricultural nutritional products rose by 11%. SABIC continued to reduce the cost of sales, by controlling fixed manufacturing costs, in addition to lower feedstock costs.

Sales and distribution costs also dropped on lower shipping costs, in addition to following internal improvement procedures to improve the supply chain’s efficiency.

SABIC indicated that it focuses on maximizing value creation activities with Saudi Aramco, implementing operational excellence programs, executing the carbon neutrality roadmap, transforming its business to achieve maximum returns, and progressing in growth despite market challenges.

It confirmed that it remains disciplined in managing its capital expenditures, estimating spending range of $3.5 to $3.8 billion for 2023.

“Despite the global weak demand for chemicals, SABIC managed to increase sales volume by 7% with improvement in EBITDA margin for this quarter,” SABIC CEO Abdulrahman Al-Fageeh said.

He added that Hadeed deal is a strategic leap that enables change, development, and growth in Saudi Arabia. It will enhance new knowledge and experience and contribute to shaping its brighter future.

Hadeed is one of the first manufacturing companies affiliated with SABIC, it is a fundamental pillar of sustainable development in Saudi Arabia.

According to data compiled by Argaam, SABIC turned to a net loss of SAR 1.04 billion in the first nine months of 2023, against a net profit of SAR 16.24 billion a year earlier. In the three-month period, the giant petrochemical producer swung to a net loss of SAR 2.9 billion due to sale of Hadeed.