Petchem prices gained as oil fell in December

Oil prices increased 0.7 percent in December but declined slightly quarter-to-date (QTD). Natural gas declined 7.6 percent month over month MoM but gained 14.8 percent year-to-date YTD. With an exception to MTBE, polystyrene and butadiene, petrochemical products prices increased during December. This is according to a new report issued by NCB Capital.
The report outlines that he TASI Petrochem index gained 5.3 percent compared to a 4.1 percent gain in the TadawuI All-Share Index. “ Saudi Kayan announced two expansion plans: i) A SR 1.9 billion butanol plant with a total capacity of 0.3 mtpa and ii) A plan to construct an UHMWPE plant with a total capacity of 35,000 mtpa. Advanced Poly Propylene Co. APPC and Turkey-based Bayegan Group terminated their MoU to construct a 450,000 mtpa polypropylene plant in Turkey. Unplanned shutdown at petrochem’s facilities extended until January 2013. Nama Chemicals started commercial operations at its calcium chloride plant in December 2012. Operations at PetroRabigh’s facilities will remain closed in January 2013 due to unplanned shutdown”, the report said.
The report refers to Saudi Kayan, Sadara Chemical Co. and Sahara Acrylic Acid Co. (SAAC) agreement to jointly build a SR1.9 billion butanol plant at Jubail Industrial City. The project is equally owned and is expected to have a total capacity of 330,000 mtpa of normal butanol and 11,000 mtpa of isobutanol. The plant will be operated by Tasnee and is expected to start the commercial operations in Q1, 2015.
Saudi Kayan signed a MoU with SABIC’s subsidiary Petrokemya to construct an ultra-high molecular weight polyethylene (UHMWPE) project with a total annual production capacity of 35,000 mtpa. The facility is expected to commence production in H2, 2014.
Saudi Ethylene & Polyethylene Co. (SEPC) signed a SR 4.8 billion Murabaha agreement to refinance the credit facility obtained in 2006 to fund the construction of its ethylene and polyethylene project. The new facility will be repaid during 2018– 21. Tasnee owns 45.5 percent stake in SEPC, while Sahara owns 24.41 percent.
APPC fully repaid a SR 400 million SIDF loan obtained in 2006. The amount was scheduled to be fully repaid in H1, 2016. Nama announced the start of commercial operations of its calcium chloride plant on Dec. 5, 2012.
Petrochem’s announced that its plant’s shutdown will be extended until January 2013. The shutdown was initially expected to last 4 weeks only, starting 10 November 2012. Petrochem initial results show losses of about SR 264 million for October and November 2012.
Chemanol’s Board of Directors approved a plan to build a new SR 75 million SNF (concrete improvers material) plant with an annual capacity of 60,000mt. Construction is expected to commence in 2013 while commercial operations are expected to start in 2015. This project will increase the company’s SNF production capacity by 35.3 percent to 230,000mt.
PetroRabigh facilities had an unexpected power and steam outage in Dec. 29, 2012. The complex will be closed for 20 days for maintenance. The company said the unplanned shutdown will not significantly impact earnings.
Oil prices increased 0.7 percent last month but declined 0.4 percent QoQ. Contrarily, Natural gas prices lost 7.6 percent in December but increased 14.8 percent in 2012. The WTI oil futures contracts for 2013 and 2014 are currently trading at a 1.5 percent and 0.4 percent, respectively, premium to the current levels. Gold future for 2015 is trading at 2.3 percent premium. This month’s oil and gas future curves are broadly in line with last month, while the gold future curve shifted downward.
The prices of natural gas and WTI oil have moved in the opposite direction in December. Petrochemical product prices increased with the exception of MTBE, polystyrene and butadiene. Base metals increased for the second consecutive month adding 0.4-7 percent.
The TASI petrochemicals sector gained 5.3 percent in December, outperforming the TASI all shares index by 1.2 percent with all the sector constituents increased during the period. APPC and Sahara were the top gainers with 12.4 percent and 11.5 percent respectively. For the year, Nama was the top gainer which was up 29.1 percent while Saudi Kayan declined 30.5 percent to be the biggest decliner in the sector. Blue chip SABIC increased 2.9 percent last month but declined 6.8 percent in 2012. On the global front, stocks continued to show a strong positive performance. Sumitomo and Dow chemicals gained 14.5 percent, 7.1 percent respectively in December. In 2012, Eastman was the top performer gaining 74.2 percent.