GCC Petrochemical Sector - 3Q11

·      WTI and OPEC prices increase by 16.5% and 31.1% respectively during 3Q11

·      GCC Petrochemical companies profit up 62.4%YoY during 3Q11

·      Rise in raw material prices and increase in demand prop up end-product prices

·      Risk remains in the form of sovereign debt crisis

GCC petrochemical companies profit up by 62.4%YoY during 3Q11

GCC petrochemical company’s 3Q11 earnings increased 62.4% YoY to USD3.57bn as compared to USD2.19bn in the same period last year. Overall, performance of regional petrochemical companies were mixed with SABIC, IQ, SAFCO, YANSAB, TASNEE, SIPCHEM and DANA reporting better than expected earnings while other stocks such as Saudi Kayan, Petro Rabigh, Saudi Petrochem and Nama Chemical continued to extend their losses as they are yet to start full throttle commercial production. Within the GCC petrochemical companies, Global Research Petrochemical Universe witnessed a sizable growth of 61.5% during 3Q11 in the profitability.

Prices of petrochemical products up on an average by 31.5%YoY during 3Q11

Producers passed on the impact of sharp rise in the prices of naphtha and other raw materials used in petrochemical products to the consumers as the prices of various petrochemical product rose in the range of 15-55% during 3Q11. In addition, strong increase in demand from Asia, particularly China, has resulted in upward pressure on end-products prices.

IQ halts steel plant projects due to gas availability while others faced technical issues

During the quarter, the company said it had put on hold two planned steel plants worth QAR8.1bn in the industrial city of Mesaieed due to problems securing natural gas for the projects. While, Saudi Chemanol and Alujain faced technical problems during the quarter. Saudi Chemanol halted production in its methanol and dimethylformamide plants for about 12 days in order to implement some technical improvements in the two plants. Alujain Corporation announces that a sudden technical problem occurred in September, 2011 in the dehydrogenation unit of its subsidiary NATPETs Propylene and Polypropylene Complex in Yanbu Industrial City caused stoppage of the production activity for two weeks. 

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