Profits from petrochemical companies in the GCC increased 62.4 per cent YoY to US$3.57 billion in the third quarter of 2011, according to a report by Global Investment House (Global).
31.5 per cent increase on price
The reason for this jump in earning was that the prices of petrochemical products increased on an average by 31.5 per cent during Q3. Producers passed on the impact of sharp rise in the prices of naphtha and other raw materials used in petrochemical products to the consumers as the prices of various petrochemical products rose in the range of 15-55 per cent.
Regional companies
Overall, the performance of regional petrochemical companies was mixed with SABIC (Saudi Basic Industries Corp.), IQ (Industries Qatar), SAFCO (Saudi Arabia Fertilizers Co.), YANSAB (Yanbu National Petrochemical Company), TASNEE (National Industrialization Co.), Sipchem (Saudi International Petrochemical Co.) and Dana Gas reporting better than expected earnings while other stocks such as Saudi Kayan Petrochemical Co., Rabigh Refining and Petrochemical Co., Saudi Petrochem and Nama Chemicals Co. continued to extend their losses as they are yet to start full throttle commercial production.
Problems faced
During Q3, Industries Qatar said it had put on hold two planned steel plants in the industrial city of Mesaieed due to problems securing natural gas for the projects. While Saudi Chemanol and Alujain faced technical problems during the quarter. Saudi Chemanol halted production in its methanol and dimethylformamide plants for about 12 days in order to implement some technical improvements in the two plants.
Alujain Corporation announced that a sudden technical problem occurred in September in the dehydrogenation unit of its subsidiary NATPETs Propylene and Polypropylene Complex in Yanbu Industrial City caused stoppage of the production activity for two weeks.
Limited QoQ growth
According to the Global report, the petrochemical sector's sales and net profitability will show limited QoQ growth as the oil prices are expected to stay in the range of US$90-US$100 a barrel in Q4.
