BCI sees stable Q3 sales volumes, price levels

Alaa Al-Sheikh CEO of Basic Chemical Industries Co.

Alaa Al-Sheikh, CEO of Basic Chemical Industries Co. (BCI), said the company expects sales volumes during Q3 2026 to remain broadly in line with the levels recorded in the first half of the year. He noted that profit margins are expected to come under pressure during Q3 2026 as inventories of raw materials are replenished at higher costs due to the current conditions.
 

In an interview with Argaam, Al-Sheikh explained that this will represent the primary challenge during the second half of the year, particularly in the fourth quarter, for most industries if the current challenges begin to ease. He added that this will depend on how quickly supply chains return to their pre-war levels.
 

“Geopolitical developments have led to a surge in raw material prices, particularly for key inputs used in polyurethane and industrial adhesives manufacturing. Freight and insurance costs have also risen to unprecedented levels, in addition to increasing difficulty in securing raw materials,” he continued.
 

The chemicals market is governed by supply and demand dynamics, as well as the nature of individual products. Basic chemicals are primarily affected by product availability and the availability of substitutes, while specialized chemicals are also impacted by supply shortages, the complexity of their manufacturing processes, and the lack of alternative products, said Al-Shaikh.
 

He added that the current geopolitical situation has further complicated supply chains, expecting current price levels to persist at a minimum, while sales volumes are likely to improve during the second half of the year if most of the company's major customers resume production.
 

Commenting on the company's Q2 2026 results, Al-Sheikh said the group's operating profit margin improved despite recording SAR 7 million in non-recurring administrative expenses, consisting of impairment charges on certain assets and additional provisions for employee-related costs. He noted that the company currently has no plans to dispose of additional assets in the near term.
 

The polyurethane sales delivered the strongest performance among the group's business segments during Q2, rising 40% quarter-on-quarter, followed by adhesives sales, which increased by 13%. In contrast, sales of basic chemicals declined by 4% due to production shutdowns at some customers' manufacturing facilities in Saudi Arabia, said the CEO.
 

He also noted that industrial chemicals and water treatment chemicals recorded a noticeable improvement in profit margins. However, their contribution to the overall results remained limited due to their relatively small scale, as the two segments together account for approximately 6% of the group's total sales.
 

According to Argaam’s data, BCI reported net profit of SAR 22.9 million for H1 of 2026, up compared to SAR 1.1 million in H1 2025. Q2 net profit amounted to SAR 17.6 million.