In a recent online press conference on August 1, Sabic CEO Abdulrahman al-Fageeh predicted a rise in global petrochemical demand in the third quarter compared to the second quarter. "We see how there is an improvement in consumption," al-Fageeh stated.
Sabic reported a 10% sequential increase in petrochemical revenues for the second quarter, reaching 33.33 billion Saudi riyals ($8.89 billion). This growth was driven primarily by higher sales volumes of methanol and increased average selling prices. Specifically, petrochemical sales volumes rose by 8% quarter-on-quarter, while prices increased by 2%. Despite this quarterly growth, petrochemical revenues for the first half of 2024 experienced a 3% year-over-year decline. Overall, total group sales for the quarter rose to 35.72 billion riyals, marking a 9% sequential increase and a 5% year-over-year rise.
The company's second-quarter net income soared more than eightfold sequentially to 2.18 billion riyals, up from 250 million riyals in the first quarter, and saw an 85% increase compared to the same period last year. This follows a net loss of 1.73 billion riyals in the fourth quarter of 2023. Earnings were primarily driven by an 11% increase in overall sales volumes sequentially, with notable growth in the Americas, declines in Europe, and stability in China, the Middle East, and the rest of Asia. Sabic's EBITDA margin improved to 16% in the quarter, up from 14% in the previous quarter.
"The increased profits were due to better product margins and increased sales volumes, along with effective management of supply chain challenges in the region," explained al-Fageeh.
Looking ahead, Sabic anticipates global GDP growth of 2.7% this year and projects its capital spending to be in the "lower range" of $4 billion to $5 billion in 2024, consistent with its latest guidance.
Most sectors of the petrochemical market exhibited positive sentiment during the quarter, with continuous improvement in the Purchasing Manager Index and a slight easing of inflation, according to the company.
In specific petrochemical markets, methyl tert-butyl ether (MTBE) demand was bolstered by gasoline blending during the peak of the summer driving season, while methanol demand remained strong in Asia, supported by low inventories, tight supply in China, and stable operations at methanol-to-olefin units. Ethylene glycol supplies increased, and demand remained stable, resulting in flat global prices. Conversely, polyethylene (PE) deliveries from the Middle East faced delays, and several plants in northeast Asia underwent maintenance, leading to slightly higher PE prices. Polypropylene prices also rose, driven by tight container and vessel supply that hindered cargo delivery. Meanwhile, the polycarbonate market continued to experience oversupply, though prices slightly increased sequentially due to high freight rates affecting demand from the automotive and construction sectors.
Additionally, Sabic announced the successful commissioning of its new hydrotreater plant in Geleen, Netherlands. This recycling facility converts pyrolysis oil from post-consumer mixed waste plastic into an alternative feedstock for producing circular polymers.
Saudi Aramco, which owns 70% of Sabic, has seen significant value from synergies between the two companies since acquiring its majority stake in June 2020. These synergies have amounted to 7.8 billion riyals through June 2024, including 607.5 million riyals in the second quarter alone.
Source: Sabic, S&P Global
