Saudi petrochem firms see 368% rebound in Q1 profits

Saudi petrochem firms see 368% rebound in Q1 profits
Saudi petrochemical producers listed on the Tadawul stock exchange reported net profits of SR8.5 billion ($2.27 billion) in the first quarter (Q1) of this year. (File)
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Updated 06 May 2021

Saudi petrochem firms see 368% rebound in Q1 profits

Saudi petrochem firms see 368% rebound in Q1 profits
  • Saudi petrochemicals giant SABIC accounts for 57 percent of total earnings in the sector

RIYADH: Saudi petrochemical producers listed on the Tadawul stock exchange reported net profits of SR8.5 billion ($2.27 billion) in the first quarter (Q1) of this year, a 368.1 percent rebound from the SR3.2 billion losses over the same period in 2020, according to data from financial information website Argaam.

The huge turnaround was due to increased prices and a surge in sales.

Saudi petrochemicals giant SABIC, which accounts for 57 percent of total earnings in the sector, last month reported that its Q1 profits had more than doubled to SR4.86 billion compared to the previous quarter.

The Riyadh-headquartered company rebounded from a loss of SR1.05 billion in the same quarter last year and, similar to the wider sector, the upsurge resulted from a hike in average sales prices of 22 percent against Q4 of 2020.

Nine petrochemical companies, including SABIC, were back in the black after reporting losses last year. The second-biggest performer was Petro Rabigh, which registered profits of SR649 million, compared to a loss of SR1.8 billion in Q1 2020.

The company with the biggest percentage turnaround was the Sahara International Petrochemical Co. (Sipchem), which reported net profits after Zakat and tax of SR411.5 million, compared to a net loss of SR52.8 million in Q1 2020, a difference of 878.99 percent year-on-year.

The National Industrialization Co. (Tasnee) logged a net profit after Zakat and tax of SR327.5 million for Q1 of this year, a 732.83 percent difference compared to a net loss of SR51.8 million in Q1 2020.

A recent report by Euler Hermes, the world’s largest trade credit insurance provider, said the rebound would continue throughout this year. It noted that the Saudi petrochemical sector had declined by around 6 percent last year due to a drop in demand caused by the coronavirus disease (COVID-19) pandemic, and a subsequent decline in prices. It added that the recent surge in demand was mainly from the food packaging and hygiene sectors.

Jean Claus, CEO of Euler Hermes for GCC countries, said: “While the Saudi petrochemical sector will bank on the global recovery, this industry also benefits from an increase in consolidation in the shape of domestic mergers and acquisitions, governmental support to increase the share of non-oil exports to 50 percent from 32.7 percent (as of October 2020) in line with Saudi Vision 2030, along with high access to external borrowing, which is an important aspect for one of the most capital-intensive sectors.”

In June, Aramco, the world’s biggest oil company, completed its share acquisition of a 70 percent stake in SABIC. The Saudi Industrial Investment Group and the National Petrochemical Co. had begun talks in September regarding a potential merger.

“Among the end users of the petrochemical product portfolio, we expect the construction industry to recover by the end of the first half (H1) of this year, while automotive and household equipment will lag behind and recover at the end of H2 2021. Airlines, as an important client of the industry, will see only pre-crisis levels by the end of 2023,” Claus added.


Saudi Arabia to reach net carbon neutrality by 2060: Crown Prince Mohammed bin Salman

Saudi Arabia to reach net carbon neutrality by 2060: Crown Prince Mohammed bin Salman
Updated 13 sec ago

Saudi Arabia to reach net carbon neutrality by 2060: Crown Prince Mohammed bin Salman

Saudi Arabia to reach net carbon neutrality by 2060: Crown Prince Mohammed bin Salman

DUBAI: Saudi Arabia’s Crown Prince Mohammed bin Salman said the Kingdom aims to achieve net carbon neutrality by 2060, during the Saudi Green Initiative forum in Riyadh on Saturday.


What to expect at the Saudi Green Initiative forum today 

What to expect at the Saudi Green Initiative forum today 
Updated 23 October 2021

What to expect at the Saudi Green Initiative forum today 

What to expect at the Saudi Green Initiative forum today 
  • Crown Prince Mohammed bin Salman is launching the forum to announce the Kingdom’s new “green” objectives

DUBAI: The Saudi Green Initiative forum in Riyadh is happening today, with high-profile government leaders and international personalities taking the stage to discuss the Kingdom’s environmental efforts. 

Crown Prince Mohammed bin Salman is opening the forum to announce the Kingdom’s new “green” objectives. 

His remarks will be followed by fireside chat with Prince Abdulaziz bin Salman bin Abdulaziz Al-Saudi, the Kingdom’s energy minister. 

Other Saudi ministers are also speaking at the forum, exploring specific themes around business and the environment, marine and ocean life, and the oil and gas industry. 

Big corporate icons, including Paddy Padmanathan of ACWA Power and Jasper Graf of Daystar Power US, are also participating in the forum.  


Bitcoin slips from record high as ETF mania subsides

Bitcoin slips from record high as ETF mania subsides
Updated 22 October 2021

Bitcoin slips from record high as ETF mania subsides

Bitcoin slips from record high as ETF mania subsides
  • JPMorgan analysts doubted whether the ETF will attract much new money into bitcoin

RIYADH: Cryptocurrencies declined on Friday following an ETF-fueled rally that saw it reach a record $67,016 on Wednesday, as investors questioned whether the new investment vehicle will attract as much new money to the assets as some have speculated.

Bitcoin, the world’s largest cryptocurrency, was trading at $63,498.16 as of 3:36 p.m. in Riyadh, a drop of 2.5 percent over the previous 24 hours. Ethereum, was 2.0 percent lower at $4,125.40 after approaching its all-time high of $4,380 from May.

Bitcoin’s recent rally — six-months after its previous top of $64,895 — was fueled by the debut of the ProShares Bitcoin Strategy ETF.

A dozen other futures-based bitcoin ETFs could launch in the coming months, with The Valkyrie Bitcoin Strategy ETF set to begin trading on Friday under the ticker BTF. The VanEck Bitcoin Strategy ETF expected to begin trading next week under the ticker XBTF.

Investors have bet the long-awaited launch of bitcoin ETFs will lead to greater investment from both retail and institutional investors, but analysts at JPMorgan suggested in a note that the ProShares ETF could have limited effect on investment volumes because there are so many options for investors already.

The ProShares ETF has created a significant shift in the balance of power among cryptocurrency exchanges. The Chicago Mercantile Exchange (CME), host to the ETF, has replaced Binance as the world’s biggest bitcoin futures platform this week.

As of 2 p.m. Riyadh time, the CME accounted for 22 percent, or $5.68 billion, of the total global futures open interest of $25.7 billion, while Binance contributed $5.66 billion, CoinDesk reported.

The value of funds held in CME-based futures contracts have tripled this month, with more than $1.5 billion flowing into the market after ProShares’ bitcoin ETF went live on Tuesday, CoinDesk said.

Elsewhere in the cryptoverse, Worldcoin said yesterday it raised $25 million from investors including Andreessen Horowitz, CoinBase Ventures and Digital Currency Group, valuing it at $1 billion.

The rather unique proposition is that coins are distributed in exchange for staring into an orb, which takes a scan of your retinas.

Based in Berlin, Worldcoin was founded by former Y Combinator President Sam Altman. It currently has 70 employees and 30 orbs, which it takes out into the world to offer worldcoins. It plans to ramp up orb production to 4,000 per month from November.

So far, about 130,000 people have stared into the orb, has a cap of 10 billion coins with the aim of giving one to every person on earth with the remaining 2 billion set aside for the Worldcoin Foundation and investors.


Oil stays near $85 a barrel, Brent set for seventh weekly gain

Oil stays near $85 a barrel, Brent set for seventh weekly gain
Image: Shutterstock
Updated 22 October 2021

Oil stays near $85 a barrel, Brent set for seventh weekly gain

Oil stays near $85 a barrel, Brent set for seventh weekly gain
  • Prices have been boosted by worries about coal and gas shortages in China, India and Europe

Oil prices stayed near multi-year highs on Friday, erasing some earlier losses in Asian trading hours, with concerns about tight supply and stockpiles fuelling bullish sentiment.


Brent crude futures rose 23 cents, or 0.3 percent, to $84.84 a barrel at 0933 GMT, after Thursday's three-year high of $86.10. The benchmark is set for its seventh weekly gain.


U.S. West Texas Intermediate (WTI) crude futures gained 20 cents, or 0.2%, to reach $82.70 a barrel, not far off a seven-year high hit this week.


Prices have been boosted by worries about coal and gas shortages in China, India and Europe, spurring some power generators to switch from gas to fuel oil and diesel.


Winter weather in much of the United States is expected to be warmer than average, according to a National Oceanic and Atmospheric Administration forecast.


"Crude oil's sharp rise may make it vulnerable to profit taking, however, a substantial correction may not happen unless global energy crisis subsides," said Ravindra Rao, vice president for commodities at Kotak Securities.


"Global gas and coal prices have eased but concerns persist with tighter market and higher demand winter season around the corner."


U.S. crude found support this week as investors eyed low crude stocks at the U.S. storage hub in Cushing, Oklahoma.


U.S. Energy Information Administration data on Wednesday showed crude stocks at Cushing fell to 31.2 million barrels, their lowest level since October 2018.


"America’s gasoline demand appears to be experiencing an Indian summer," PVM analysts said in a note, pointing to the highest implied demand for this time of year since 2007 despite high pump prices.

 

 

 


Equities eye third week of gains after tech boost, S&P 500 hits new record

Equities eye third week of gains after tech boost, S&P 500 hits new record
Image: Shutterstock
Updated 22 October 2021

Equities eye third week of gains after tech boost, S&P 500 hits new record

Equities eye third week of gains after tech boost, S&P 500 hits new record

Global shares were on course for their third straight week of gains on Friday, buoyed by tech stocks in Asia overnight, while the dollar dipped and oil prices held steady.


MSCI's broadest gauge of global shares was up 0.1 percent in early European trade, 1.4 percent higher on the week and just 0.8 percent off its all-time high.

Germany's DAX gained 0.4 percent to 15,535.16. In Paris, the CAC 40 jumped 1.1 percent to 6,759.46, while Britain's FTSE 100 added 0.4 percent to 7,220.57.

The future for the S&P 500 was nearly unchanged while the future for the Dow industrials gained less than 0.1 percent.


On Thursday, the S&P 500 rose 0.3 percent to 4,549.78, its seventh straight gain. That eclipsed the record high it set on Sept. 2. 


That followed gains in Asia, where equity bulls were also comforted by news that heavily indebted Chinese property firm China Evergrande Group had made a surprise interest payment, averting a default for now.


Japan's Nikkei advanced 0.3 percent, led by the technology sector, while energy and basic materials shares were the biggest drags as coal futures extended their losses after Beijing signalled it would intervene to cool surging prices that contributed to the country's electricity shortage.


More broadly, investors have become increasingly concerned that persistent inflation could force central bankers to tighten monetary policy at a point where global economic growth remains fragile.


Mark Haefele, Chief Investment Officer, UBS Global Wealth Management, said in a note to clients that equities could still move higher, despite growing concerns around the impact of inflation and the potential for central banks to tighten policy.


"With current issues still appearing more temporary than structural, we believe equity markets will continue to move higher," Haefele said.


"Indeed, small increases in inflation expectations can be positive for markets if it helps to banish fears of deflation. Furthermore, by our assessment, global growth remains strong, supply chain challenges should recede into 2022, and corporate earnings should continue to grow."


U.S. stock futures point to a 0.1 percent lower open, after the cash index posted a record closing high overnight, led by surging tech shares.


Next week, Facebook, Apple, Amazon, and Google-owner Alphabet all report, with bulls hoping they can follow forecast-beating earnings this week from Netflix.


Meanwhile, yields on benchmark 10-year Treasury notes were at 1.6828 percent, easing back from a five-month high of 1.7050 percent reached overnight.


The dollar index, which gauges the greenback against six major rivals, was down 0.1 percent to 93.639 on Friday, despite initially bouncing off recent lows after U.S. jobless claims fell to a 19-month low, pointing to a tighter labor market.


The Fed has signalled it could start to taper stimulus as soon as next month, with rate hikes to follow late next year. Full employment is among the Fed's stated requirements for rates lift-off.


Fed Chair Jerome Powell speaks later on Friday in a panel discussion.


Across commodities, oil was flat with Brent crude set for its first losing week in seven and West Texas Intermediate its first in nine.


Gold was up 0.5 percent on the back of the weaker dollar, on course for its second week of gains.