Riyadh – Mubasher: Companies in the Saudi petrochemicals sector are forecast to report profit declines in the second quarter of 2017 on the back of lower product prices and the temporary closure of several plants for maintenance purposes, according to Al Rajhi Capital.
Quarter-on-quarter, Brent crude prices fell 5% on average in Q2-17 as investors had been anticipating further output cuts from the Organization of Petroleum Exporting Countries (OPEC) in order to reduce pressure on prices and offset the impact of higher US production, the research firm stated.
In line with the decline in oil prices, average prices of many polymer products retreated quarter-on-quarter as the prices of polypropylene and polyethylene were down by 12.1% and 4.7%, respectively amid low demand, the report released Tuesday showed.
In terms of cost, butane prices dropped by as much as 23% in Q2-17 compared to Q1-17, while propane and Naftha declined 14% and 6%, respectively, resulting in lower price differences in several companies’ products, the company added.
The above data indicates that petrochemical companies in Saudi Arabia will suffer weak or falling profits in Q2-17, Al Rajhi Capital said.
The research firm forecast that Saudi Basic Industries Corp (SABIC) would see profits of around SAR 4.9 billion in Q2-17 on the back of weak revenues from lower product prices.
