Plummeting oil prices will continue squeezing the earnings of Saudi petrochemical companies during Q3-15, Aljazira Capital said in an earnings outlook for the sector.
Prices are forecast to drop on an annual basis, except DAP-Fertilizer, which is expected to witness a marginal 1.3 percent rise.
Naphtha is likely to be the biggest loser, with prices declining 49.1 percent year-on-year, followed by Benzene, down 48.3 percent YOY, and Propylene, falling 41.1 percent YOY.
However, on a quarterly basis, Naphtha is seen to decline 17.2 percent, and Ethylene is anticipated to be the biggest loser in Q3, falling 28.9 percent QOQ.
Lower feedstock prices (Naphtha) have already weighed on prices of petrochemical intermediates and final products. However, the decline in Polymer prices is expected to be lower than that in feedstock costs, which should quietly boost Polymer margins. Fertilizer feedstock and product prices have so far remained resilient.
Styrene prices are expected to decline 19.2 percent QOQ; however, polystyrene prices are expected to slide 11.5 percent QOQ, thus reflecting positively on margins.
Overall, margin expansion across the sector is expected to benefit some petrochemical producers during Q3-2015.
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