Advanced Petrochemical Co. (Advanced) has passed the difficult stage, as prices are stabilizing, CEO Fahad Al-Matrafi told Argaam in an exclusive, describing this as positive and expecting a marginal price increase during Q4 2020.
The polypropylene prices witnessed slight improvement as the lockdown measures were eased in most countries, he said, citing a recovery in industry and demand.
Propylene prices usually rise in the first and fourth quarters of every year, driven by seasonality factors and higher demand.
“SK Advanced Co. Ltd has operated with full capacity since early April. Production has improved since the beginning of the third quarter, and better profit margins led to a rise in Advanced’s profit share,” he added.
Moreover, Al-Matrafi expected prices to remain stable but with a marginal increase in the fourth quarter in certain markets such as Latin America.
The company targets highest-yield and highly-resilient markets, in addition to shifting between markets in coordination with marketing specialists.
The company owns a propylene plant, with a 110% production capacity and a polypropylene plant with a 131% capacity, Al-Matrafi said, adding that these high capacities set the benchmark for the sector.
The polypropylene plant is in the third year of operation and will undergo maintenance, which is implemented every three years. In Q1 2021, Advanced aims to begin maintenance works, as the terminal year of operation could partly impact the plant and might even lead to a slight drop in sales.
In addition, a 91% drop in financial charges is attributed to the company’s repayment of sukuk in 2019. Advanced, however, owes a principal loan of nearly SAR 1.5 billion to partly finance its new project, but the facility has not yet been used, he noted.
Advanced reported an estimated net profit after Zakat and tax of SAR 416 million for the first nine months of 2020, a 27% year-on-year (YoY) decline, Argaam reported.
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