Saudi petchem sector’s profit fell 5% in Q1: Aljazira Capital

Total net profit of Saudi petrochemical companies dropped 5 percent to SAR 4.2 billion in Q1 2016 from SAR 4.4 billion in the same period last year, according to a market summary by Aljazira Capital.

Market heavyweight Saudi Basic Industries Corp and Saudi Arabia Fertilizers Co. (SAFCO) reported a decline of 13.4 percent year-on-year (YoY) and 51.5 percent YoY, respectively.

The sector’s weighted-average EPS stood at SAR 0.7 per share.

SAFCO, Saudi International Petrochemical Co., and Saudi Industrial Investment Group were the worst performers. Their net profit fell to SAR 285.9 million, SAR 50.7 million, and SAR 87.7 million, respectively, in the quarter.

SAFCO and SABIC both had a high dividend yield in the sector at 9.1 percent and 7.06 percent, respectively.

Tracking oil prices, though at a slower pace, naphtha feedstock gained 5.2 percent in April to $405 a ton month-on-month. Despite the failure of Doha talks, Brent and WTI prices rose 19.0 percent month-on-month (MoM) to $48.1 per barrel and 16.4 percent MoM to $45.9 a barrel, respectively. Tracking cues, Henry Hub natural gas prices increased 20.6 percent MoM to $ 2.18 per mmbtu. 

The prices of polyethylene derivatives declined MoM by varying degrees, with LLDPE prices falling the most, or 4.3 percent to $1,120 per ton; followed by HDPE, down 3.4 percent MoM to $1,125 per ton; and LDPE down 2.5 percent MoM to $1,175 per ton.

Polypropylene and PVC prices gained, while polystyrene prices remained flat MoM. Among polymers, PVC prices gained the most, rising 3.1 percent MoM to $820 per ton, followed by PP prices, which increased 1 percent MoM to $1,000 per ton. Polystyrene prices remained flat MoM at $1,250 per ton.

MEG prices fell 5.0 percent MoM to $670 per ton, while methanol prices rose 3.9 percent MoM to $265 per ton.

TiO2 prices remained flat in April, at $2,358 per ton. Ammonia prices declined 1.5 percent MoM to $325 per ton. Urea increased 10.3 percent MoM to $215 per ton, while DAP prices declined 4.1 percent MoM to $355 per ton.