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Petronas Chemicals profits plunge on lower product prices, weakening currency

November 15/2019

MOSCOW (MRC) -- Petronas Chemicals Group (Kuala Lumpur, Malaysia) has reported a massive drop in third-quarter profits and significantly lower sales, reported Chemweek.

Net profit declined to 558 million Malaysian ringgit (USD134.37 million) from RM1.332 billion in the year-earlier quarter. EBITDA decreased by 44% to RM915 million largely due to compressed margins, and sales were down 24.0% to RM3.67 billion. Commenting on the results, CEO Sazali Hamzah said, Petrochemical product prices have stabilized but market outlook remains soft due to lower global GDP growth and expected additional capacities coming onstream, resulting in a long market. However, market fundamentals remain strong in the Asia Pacific region."
 
Sazali said that construction on PCGs new plants at the Pengerang Integrated Complex (PIC) is nearing completion and the company remains on track to commence commercial operations by the end of the year. "We are now in the process of stabilizing the plants to deliver additional capacity of a new product range to meet our customers requirements." Saudi Aramco holds a 50% stake in PCGs polyolefins complex within PIC and it also has a 50% stake in the upstream steam cracker, a joint venture with PCGs parent, Petronas.
 
All PCGs segments reported lower sales and profits. The olefins and derivatives business recorded net profit of RM232 million compared with RM762 million in the third quarter of 2018. Revenue in the segment was down 28% to RM2.281 billion. Fertilizers and methanol net profit declined from RM427 million to RM315 million, and revenue was 18% lower at RM1.381 billion.
 
PCG recorded plant utilization rates of 81%, an improvement from 79% in the corresponding quarter of 2018. Production and sales volumes were higher but product prices declined in tandem with declining crude oil price and softer market demand. The olefins and derivatives segment recorded plant utilization rates of 78% compared with 96% in the corresponding quarter, primarily due to higher statutory turnaround activities. Sales volume was lower in line with lower production.

The fertilizers and methanol business recorded an improvement in plant utilization rates to an average of 83%, up from 69% in the corresponding quarter mainly due to better plant performance and lower statutory turnaround activities.

PCG anticipates product prices for olefins and derivatives to stabilize in the fourth quarter on the back of supply limitation following planned regional turnarounds. The company also forecasts stabilization in fertilizers and methanol prices due to limited supply amid soft demand from the end products.

As MRC informed earlier, in early November 2019, Saudi Aramco approached Malaysian state energy company Petronas to participate in Aramcos IPO, Petronas said, as the Middle Eastern oil giant seeks cornerstone investors for the listing.

Besides, we remind that Saudi Aramco, which temporarily lost half of its oil production following the September 14 attacks on two key oil facilities, is running its local refineries at full capacity and is forging ahead with plans to start up new refineries. The company is also starting up a joint venture refinery in Malaysia next year. According to Aramco's bond prospectus released in April, the refining and petrochemical joint venture with Petronas - the Malaysian national oil company - collectively known as PRefChem, was supposed to start this year.

The PRefChem joint venture includes a 300,000 b/d refinery, an integrated steam cracker with capacity to produce 1.3 million mt of ethylene located in Johor, Malaysia. Aramco was supposed to provide a significant portion of PRefChem's crude supply under a long-term supply agreement. Jazan and PrefChem will help Aramco reach a gross refining capacity of 5.6 million b/d, it said in the prospectus. The company currently owns and has stakes in four refineries abroad with a total refining capacity exceeding 2 million b/d.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polyprolypele (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,589,580 tonnes in the first nine months of 2019, up by 7% year on year.  Shipments of all PE grades increased. The estimated PP consumption in the Russian market was 976,790 tonnes in January-September 2019, up by 4% year on year. Shipments of PP block copolymer and homopolymer PP increased.

Saudi Aramco is an integrated oil and chemicals company, a global leader in hydrocarbon production, refining processes and distribution, as well as one of the largest global oil exporters. It manages proven reserves of crude oil and condensate estimated at 261.1bn barrels, and produces 9.54 million bbl daily. Headquartered in Dhahran, Saudi Arabia, the company employs over 61,000 staff in 77 countries.


mrcplast.com
Author:Margaret Volkova
Tags:PP, PE, crude and gaz condensate, PP block copolymer, homopolymer PP, propylene, ethylene, petrochemistry, Petronas, PRefChem, Saudi Aramco, Malaysia, Russia, Saudi Arabia.
Category:General News
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