Sipchem product prices pressured by soft demand, expects positive figures in Q3 2020: CEO

Sahara International Petrochemical Co. (Sipchem) faced a number of challenges this year, like global peers, as selling prices went down triggered by a lower global demand due to the COVID-19 outbreak, Chief Executive Officer Saleh Bahamdan told Argaam.

"We managed to run operations normally at the full production capacity, in line with health and safety measures. Sipchem's marketing team implemented a quick sale strategy to avoid accumulated inventory, maintain cash collection cycle, and enhance the company's market position," Bahamdan added.

As for product prices, methanol declined by around 44%, vinyl acetate dropped by 14%, while polypropylene was down by 16%. Compared to H1 2019, prices of ethylene dichloride decreased by nearly 50%, methanol (35%) and polypropylene (25%).

"Sipchem is expected to report positive results in Q3 2020, compared to the severe decline across the board in Q2 2020," Bahamdan indicated.

The petrochemicals industry saw improved demand and slightly better prices by end of June 2020, but markets are still unstable with a foggy outlook due to the unclear vision as regards the consumers' attitude after the COVID-19 outbreak.

"We expect higher prices in the summer season, especially in construction and transport sectors, based on the potential stability of the global economy as well as the crude prices, in addition to the world governments' control over the pandemic outbreak," Bahamdan noted.

The extension of the gas supply agreement with Linde Plc until Q3 2020 will boost the company's growth as a key producer and distributor of industrial gases. The end-products will become more competitive with higher operating efficiency, which will reflect positively on the company's performance.

Sipchem reported SAR 151.8 million losses in H1 2020, versus net earnings of SAR 325.6 million in prior-year period, Argaam reported.