BCI CEO expects steady demand in Q2, better profit margins

Alaa Al-Shaikh, CEO of BCI

Basic Chemical Industries Co. (BCI) CEO Alaa Al-Shaikh said demand is expected to remain steady during Q2 2026 at levels similar to Q1, along with a relative improvement in profit margins.

This will be driven by the company’s focus on serving and supporting customers under the current conditions, Al-Shaikh told Argaam in an interview.

BCI returned to profitability in Q1 2026 came as a result of the continued restructuring of the company’s operations.

“We focused primarily on the products of the Jubail Industrial City plant and operated it at full capacity for three consecutive years, while selling its full production within Saudi Arabia and regional markets, in preparation for operating the plant’s first expansion during the first quarter of next year, which will add around 40% to production capacity,” he added.

The basic materials segment — which includes chlorine, caustic soda, hydrochloric acid, sulfuric acid, and sodium hypochlorite products — was the main growth driver in Q1 2026 after sales rose 35% year-on-year, accounting for 37% of the company’s total sales, said the top executive.

Meanwhile, sales of the polyurethane segment, which represents 17% of BCI’s sales, declined by 19%, while adhesive segment sales increased 15% during Q1, representing 35% of total sales. Industrial chemicals sales grew 45%, with industrial chemicals and water treatment chemicals together accounting for around 11% of total sales.

Regarding the impact of raw material and energy prices on profit margins during 2026, Al Sheikh said raw material prices soared by between 30% and 50%, due to higher energy, shipping, and insurance costs, in addition to shortages of certain materials in global markets, while hydrocarbon material prices rose at much higher rates.

The continued closure of the Strait of Hormuz is expected to affect sold volumes more quickly and more significantly than prices, given that final products depend on multiple manufacturing inputs and not only chemicals. Some spare-parts manufacturers have either stopped operations or reduced production in regions where energy prices have risen sharply, such as European countries, which could negatively affect manufacturing operations in the region over the medium term, the CEO said.

He explained that the war affected some customers in terms of continuity of demand and quantities sold. “However, we have established an operations room to monitor rapidly changing market conditions and accelerate responses. We also supported major customers by allocating specific quantities to each customer to ensure continuity of operations, especially in vital sectors such as water, food industries, and packaging,” he added.

Furthermore, supply chains will likely require several months, and possibly until next year, to return to normal levels seen prior to the war, he added.

Al-Shaikh also expected the group’s positive results to continue during Q2 2026, with variation in performance among business units due to differences in products and markets served.

According to Argaam data, BCI swung to SAR 5.3 million profit in Q1 2026, versus losses of SAR 2.5 million during the same period in 2025.