Khalifa Al Mulhem, Chairman of Advanced Petrochemical Co.
Khalifa Al-Mulhem, Chairman of Advanced Petrochemical Co., said the growth in net profit for the fourth quarter of 2023 was driven by the rise in selling prices, which were up 6% quarter-on-quarter, adding that prices were largely unchanged compared to the same period a year ago.
Prices were largely unchanged compared to the same period a year ago, he told Argaam.
Selling prices of the company's products amounted to around $1,040 per ton in Q4 2023, compared to SAR 986 per ton in Q3 2023.
The company was not affected by the decision to increase feedstock prices, as it uses propane gas, along with a small amount of methane gas for heating. Therefore, the impact will be insignificant, said the top executive, adding that the price of propane is variable and linked to international prices.
Al Mulhem also indicated that Turkey was the company's top market in Q4 2023, in addition to the European market.
Regarding the SK Advanced investment, he said it is still logging losses, including the fourth quarter of 2023. The CEO underlined that the company’s results follow the profit margins in the entire sector, which are considered historically very low, thus impacting results. He expects this situation to continue until product prices rebound.
There is still ambiguity about the future of prices in the petrochemical market, due to the decline in the Chinese economy and the geopolitical tensions in the region, which result in uncertainty about predicting prices, according to Al Mulhem.
Prices of petrochemical products are somewhat catching up with oil prices — which are seen ranging between $80-90 a barrel, he further stated.
The top executive expected that the Jubail Petrochemical Complex 2 project would amplify production capacity, as operations are expected to kick off in the second half of 2024. He also predicted product prices to improve and achieve strong returns for Advanced, especially with the rise in interest rates on loans.
Advanced’s profit fell 42% to SAR 171 million in 2023, from SAR 295 million in the year before. The fourth-quarter profit amounted to SAR 23 million, according to data available to Argaam.
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