Saudi petrochemical sector faces mixed prospects

18 Jun '12

2 min read

There are mixed signals for the petrochemical industry in Kingdom of Saudi Arabia (KSA), according to the latest report on “KSA Petrochemical Sector”, released by the NCB Capital.

The report states that weaker prices and a slowdown in demand are the adverse factors affecting the Kingdom’s petrochemical sector.

It adds that the continued economic uncertainty in European countries and decrease in petrochemical imports by China is also a cause of worry.

It further predicts that the demand for petrochemical products is likely to remain under pressure in the near future and a strong rebound is unlikely.

The study states there would be a drop in petrochemical prices in the second-half of the current year due to uncertain global environment and decline in oil prices.

It forecasts that the prices of all petrochemical products, except benzene and methanol, are likely to decline by 5-10 percent year-on-year in 2012.

But, the report adds, Saudi petrochemical companies are in a better position to withstand the pressure compared to those of other countries owing to lower cost of production in the Kingdom.

The Kingdom’s geographical proximity to the Asian countries, whose share in global petrochemical demand is increasing, is an advantageous factor for Saudi firms. Further, the increase in demand for petrochemicals in the US is a positive sign, according to the study.

The Asia-Pacific region accounted for 34 percent of global ethylene production in 2011, followed by North America with 23 percent, the Middle East and Africa 19 percent and Western Europe 17 percent.

Fibre2fashion News Desk - India