MOSCOW (MRC) -- Saudi Arabia’s petrochemical companies are expected to disappoint in the third quarter after crude prices fell 15% over the same period, analysts say, reported The National.
"The only sector where we could have some negative surprises is petrochemicals, because they took a hit with the fall of oil prices in the quarter," said Sebastien Henin, the head of asset management at The National Investor, an Abu Dhabi-based investment bank.
Petrochemical prices are closely linked to prevailing oil prices because naphtha, a common feedstock, closely tracks the price of crude.
Saudi Arabia is the biggest producer in Opec and its petrochemicals sector has the biggest representation on the kingdom’s stock exchange. The results should trigger profit-taking as companies such as Sabic, the world’s biggest petrochemicals maker by market value, have performed extremely well of late, Mr Henin said. Shares of Sabic rallied 17 per cent from July 21 to September 9, he added.
Weighed by petrochemicals, Saudi Arabia’s companies are expected to register 5% growth in profits to 25.5 billion riyals (Dh24.97bn), Mubasher wrote. The financial and healthcare sectors are expected to register growth of 16%, it added.
As MRC wrote before, Sabic is modifying its Wilton cracker in the UK to enable it to use ethane feedstock imported from the US. The company is aiming to complete the project by 2016. Sabic had said in 2013 that it was studying the possibility of converting the naphtha cracker. The nameplate capacity is 865,000 tpy of ethylene, 400,000 tpy of propylene and 100,000 tpy of butadiene.
Saudi Basic Industries Corporation (SABIC) ranks among the world’s top petrochemical companies. The company is among the world’s market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers.
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