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Saudi Arabia’s Industrial Production Index rises 7.3% y-o-y: GASTAT  

Saudi Arabia’s Industrial Production Index rises 7.3% y-o-y: GASTAT  
GASTAT report noted that the mining and quarrying sector rose by 4.3 percent in December 2022 compared to the same month in 2021. (Shutterstock)
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Updated 09 February 2023
Nirmal Narayanan  

Saudi Arabia’s Industrial Production Index rises 7.3% y-o-y: GASTAT  

Saudi Arabia’s Industrial Production Index rises 7.3% y-o-y: GASTAT  
Updated 09 February 2023
Nirmal Narayanan  

RIYADH: Saudi Arabia’s Industrial Production Index rose 7.3 percent year-on-year in December 2022, primarily driven by high production in mining and quarrying, and manufacturing activities, a new report released by the General Authority for Statistics showed.   

After months of negative trends in 2019 and 2020 due to the COVID-19 pandemic, Saudi Arabia’s IPI turned positive in May 2021 and has been growing continuously since then.   

GASTAT report noted that the mining and quarrying sector rose by 4.1 percent in December 2022 compared to the same month in 2021.   

Saudi Arabia’s mining and quarrying activities also increased as the Kingdom raised its oil production to more than 10 million barrels per day in December 2022.   

The report further pointed out that manufacturing activities increased by 18.5 percent in December 2022, compared to December 2021.   

According to GASTAT, IPI is an economic indicator that reflects the relative changes in the volume of industrial output, and it is calculated based on the industrial production survey.   

The report said that the relative weights of the mining and quarrying, manufacturing and electricity and gas supply sectors in the IPI are 74.5 percent, 22.6 percent and 2.9 percent, respectively.  

“Thus, the trend of the industrial production index in the mining and quarrying sector dominates the trend in the general IPI,” it added.   

In December 2022, Saudi Arabia’s electricity and gas supplies decreased by 6.5 percent compared to the same month in 2021.  

The GASTAT report which was released on Feb. 9, however, noted that overall IPI decreased by 0.3 percent in December 2022 when compared with November 2022.   

This decline was due to the decrease in the mining and quarrying sector which fell by 0.3 percent, it added.   

According to the report, the manufacturing sector remained unchanged in December 2022 compared to the previous month, while electricity and gas supplies decreased by 5.3 percent.   

Even though Saudi Arabia’s IPI is still showing positive trends, its growth has slowed down for the eighth month in a row from a 26.7 year-on-year growth reported in April 2022. 

It should be also noted that Saudi Arabia’s IPI growth in December is the slowest in 2022 as it went below the 11.1 percent year-on-year growth reported in January last year. 

Topics: GASTAT Saudi Production Mining

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China to implement zero tariffs on coal imports to the end 2023

China to implement zero tariffs on coal imports to the end 2023
Updated 24 March 2023
Reuters

China to implement zero tariffs on coal imports to the end 2023

China to implement zero tariffs on coal imports to the end 2023
Updated 24 March 2023
Reuters

BEIJING: China will extend some preferential tax policies and continue to implement zero tariffs on coal imports until the end of this year, state media CCTV reported on Friday, citing a cabinet meeting chaired by Premier Li Qiang on the same day, according to Reuters.

China cut tariffs on coal to zero in April last year in the face of concerns over domestic energy security and supply disruptions.

The country’s coal imports in the first two months of this year surged 71 percent from the same period last year, as utilities stepped up purchases of cheap thermal coal from Indonesia while arrivals from Mongolia also picked up after the easing of COVID-19 restrictions.

China will also cut some taxes for small companies and individual businesses and extend such favorable policy until the end of 2024, state media reported.

Other preferential tax policies include a reduction in tax related to research and development and a halving of logistics companies’ tax on warehouse land for bulk commodity storage in urban areas.

The cuts are expected to reduce the total burden by more than 480 billion yuan ($69.80 billion) a year, CCTV said.

Last year, when private businesses were hit hard by stringent COVID-19 lockdowns and curbs, China’s tax and fee cuts, tax refunds and deferred payments totalled 4.2 trillion yuan, the finance ministry said. That included 2.4 trillion yuan in VAT tax rebates, the largest in recent years.

Topics: China coal imports coal

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World shares fall on banking turmoil, recession worries

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Updated 24 March 2023
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World shares fall on banking turmoil, recession worries

World shares fall on banking turmoil, recession worries
Updated 24 March 2023
Associated Press

BANGKOK: Shares fell Friday in Europe and Asia as worries flared over turmoil in the banking sector and potentially worsening risks of recession, according to the Associated Press.

European benchmarks sank as shares in Deutsche Bank plunged more than 10 percent. Reports said its shares fell because the company was facing higher costs for insuring itself against default. US futures turned lower and oil prices fell more than $2.

Investors are worried that more banks might suffer a debilitating exodus of customers following the second and third-largest US bank failures in history. That turmoil is clouding the outlook for what the Federal Reserve will do with interest rates after hiking them to market-rattling heights over the last year.

The fear is that all the turmoil in the banking industry could cause a sharp pullback in lending to small and midsized businesses around the country. That could put more pressure on the economy, raising the risk for a recession that many economists already saw as likely.

Germany’s DAX lost 2.5 percent to 14,834.24 and the CAC 40 in Paris tumbled 2.5 percent to 6,965.01. Britain’s FTSE 100 declined 2.1 percent to 7,245.65. The future for the S&P 500 was 0.9 percent lower while that for the Dow industrials lost 1.1 percent.

Deutsche Bank’s shares plunged 14 percent after an overnight surge in credit default swaps — a hedge against defaults for bond investors. Other European banks also lost ground. Commerzbank dropped 8.7 percent,

Societe General skidded 7.7 percent and Credit Suisse, itself subject to a government-arranged buyout by UBS, dropped 8.6 percent. UBS gave up 8 percent.

Regional banks’ shares in Asia were modestly lower Friday, with HSBC Holdings plc losing 2.9 percent in Hong Kong while mid-sized Japanese bank Resona Holdings declined 2.6 percent.

Shares in Japanese energy and electronics company Toshiba Corp. gained 4.2 percent after it announced late Thursday that it had accepted a $15 billion tender offer from a buyout fund made up of the nation’s major banks and companies. If regulators approve it, the proposed buyout by private equity firm Japan Industrial Partners would be a major step in troubled Toshiba’s yearslong turnaround effort, allowing it to go private.

Japan reported that its inflation rate fell to 3.3 percent in February from 4.3 percent the month before, though core inflation excluding fresh food and energy costs rose to 3.5 percent from 3.2 percent. The data suggest persisting pressure on the Bank of Japan to adjust its below zero interest rate policy, though economists said they expect price pressures to abate in coming months.

“Given the recent market turmoil surrounding the banking sector,” ING economists said, “the BOJ’s move will likely be well communicated with the market before it substantially changes its policy.”

Tokyo’s Nikkei 225 index lost 0.1 percent to 27,385.25 and the Kospi in Seoul gave up 0.4 percent to 2,414.96. Hong Kong’s Hang Seng slipped 0.7 percent to 19,915.68 and the Shanghai Composite index sank 0.6 percent to 3,265.65.

Australia’s S&P/ASX 200 shed 0.2 percent to 6,955.20. Shares fell in Mumbai but rose in Bangkok and Taiwan.

On Thursday, the S&P 500 added 0.3 percent for its third gain in four days while the Dow Jones Industrial Average gained 0.2 percent. The Nasdaq composite held up better thanks to strength in technology shares, gaining 1 percent.

Stocks fell sharply the day before after the Federal Reserve indicated that while the end may be near for its hikes to interest rates, it still doesn’t expect to cut rates this year. Fed Chair Jerome Powell also insisted the Fed could keep raising rates if inflation stays high.

Stocks in the financial industry ended up being the heaviest weight on the S&P 500 despite rising in the morning. First Republic Bank fell 6 percent after giving up a gain of nearly 10 percent.

In other trading Friday, US benchmark crude oil dropped $3.09 to $66.87 per barrel in electronic trading on the New York Mercantile Exchange. It gave up 94 cents to $69.96 per barrel.

Brent crude, the pricing basis for international oil, lost $3.08 to $72.42 per barrel.

The US dollar fell to 130.09 yen from 130.83 yen. The euro slipped to $1.0743 from $1.0833.

Topics: world shares global markets

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Apico secures $29m funding for new plastics factory in Riyadh

Apico secures $29m funding for new plastics factory in Riyadh
Updated 24 March 2023
Arab News

Apico secures $29m funding for new plastics factory in Riyadh

Apico secures $29m funding for new plastics factory in Riyadh
Updated 24 March 2023
Arab News

RIYADH: A new plastics factory in Riyadh is a step closer after the Arabian Plastic Industrial Co. secured SR105.5 million ($29 million) of funding from the Saudi Investment Bank.

According to a filing to the Kingdom’s stock market, Apico will use the funds – which come in the form of working capital and a medium term loan – to build the facility as part of a plan to expand production.

The Jeddah-based company had signed a land lease contract with the Saudi Authority for Industrial Cities and Technology Zones – known as Modon – in 2022 with regards to the factory.

Of the SR105.5 million, SR55.5 million will be spent on the expansion with the remainder earmarked for existing facilities.

Apico made its debut on the Kingdom’s stock market in October 2022, when its shares climbed 18.52 percent above its listing price on the first day of trading.

The company offered 1 million shares, or 20 percent, of its SR50 million market capitalization.

The offering coverage was 15.43 times oversubscribed, with the offer price set at SR27 per share.

Established in 1996, Apico serves customers across different sectors, including to Almarai Co., flynas, TotalEnergies, and Nahdi Medical Co..

Topics: Apico Arabian Plastic Industrial Co

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Moody’s boosts ratings for six key Saudi companies, including PIF and Aramco

Moody’s boosts ratings for six key Saudi companies, including PIF and Aramco
Updated 24 March 2023
Arab News

Moody’s boosts ratings for six key Saudi companies, including PIF and Aramco

Moody’s boosts ratings for six key Saudi companies, including PIF and Aramco
Updated 24 March 2023
Arab News

RIYADH: Saudi Arabia’s Public Investment Fund and energy giant Aramco are among six firms in the Kingdom to have their ratings boosted from stable to positive by Moody's Investors Service.

The credit rating agency said the upgrade in outlook is linked to the strength of Saudi Arabia’s economy, which was also changed to positive from stable earlier this month.

Saudi Basic Industries Corporation, also known as SABIC, Saudi Telecom Co., known as stc, and the Saudi Power Procurement Co. were among the other companies to see their grading increase.

The Saudi Electricity Co. also received a boost.

In a report explaining its rationale for the shift, the ratings agency said: “(These) rating actions are a direct consequence of the sovereign rating action and reflect the credit linkages between the Government of Saudi Arabia and each of the six entities. 

“While these corporates benefit to varying degrees from international assets and cash flows, they all have significant credit linkages to the Saudi Arabia sovereign and are exposed to the domestic environment including political, economic, regulatory and social factors.”

Reflecting on Aramco, the report said the company’s A1 rating “reflects its very large operational scale, significant downstream integration and strong financial flexibility given its low cost structure and low leverage relative to cash flows.”

It added: “These characteristics provide resilience through oil price cycles and also help mitigate carbon transition risk, which is a material credit consideration for oil and gas companies.”

Moody’s said that SABIC had been able to maintain its strong global position in the petrochemical and fertilizer market thanks to “competitively priced domestic feedstock under long-term contracts with Saudi Aramco.”

The report added: “These advantages help mitigate to an extent the volatility of its predominantly commodity-based petrochemical, fertilizer and steel activities and SABIC's asset concentration in Saudi Arabia.”

In a section on the PIF, Moody’s said the organization had a “high-quality investment portfolio”, a “very strong financial profile with very low leverage and very high interest coverage”, and an “excellent liquidity profile”.

Topics: Moody’s Investor Service Saudi Aramco Public Investment Fund (PIF) Saudi Basic Industries Corp. (SABIC) Saudi Telecom Company (STC) Saudi Power Procurement Co

NEOM Airlines set for take-off by end of 2024, CEO reveals

NEOM Airlines set for take-off by end of 2024, CEO reveals
Updated 24 March 2023
Arab News

NEOM Airlines set for take-off by end of 2024, CEO reveals

NEOM Airlines set for take-off by end of 2024, CEO reveals
Updated 24 March 2023
Arab News

RIYADH: A dedicated airline for Saudi Arabia’s futuristic city NEOM will take to the skies by the end of 2024, the carrier’s CEO has revealed.

Writing in a blog post, Klaus Goersch set out an ambitious vision for NEOM Airlines, promising that passengers will receive “a completely different travel experience”.

Goersch, who has previously served as chief operating officer of British Airways and Air Canada, argued the new service will be “futuristic and efficient”, adding: “I can honestly say the opportunity here is way beyond anything else out there.”

The development of the airline comes as Saudi Arabia seeks to boost its aviation sector, with Crown Prince Mohammed bin Salman earlier this month announcing a new carrier, Riyadh Air, which will benefit from a $37 billion aircraft deal with US firm Boeing.

In his blog post, Goersch painted his vision for NEOM Airlines as he set out the “new future” for air travel.

He said: “Just imagine if your bags were collected from your home or office and delivered to the hotel or residence you were going to. 

“Imagine if biometrics were advanced enough to recognize you via facial recognition as soon as you walked in a building, security clearing you for travel without the need for even going through a gate – let alone having to bother with a visa. 

“And just imagine the time of your meeting changed by a few hours and you were able to change your flight to a later one, without hassle or cost. 

“Better still, imagine you are collecting loyalty points at the airport – where the whole place is lounge-style service – as well as while flying and when using the facilities in your destination, because everything is owned by the same company.”

Goersch went on to say the airline will initially retrofit existing aircraft in order to get the carrier up and running, before shifting to new planes. 

“Come 2026 onwards, there will be new innovative aircraft – whether it be electric, hydrogen-powered or supersonic – and next-generation interiors coming online from us. We are already in discussions with plane, interior and seat manufacturers,” he wrote.

In keeping with NEOM’s pledge to be environmentally-friendly Goersch said the airline’s ambition is for every flight to have “ some sustainable fuel onboard” originating from mixing facilities at NEOM. 

He added: “Sustainability will even stretch into the catering, with foods sourced locally from here and delivered via on-demand dining at a time when you actually feel like eating. 

“We will look at every single component right down to the carpets and single-use plastics. 

“Little things like this will accumulate and add up to more than the sum of their parts.”

The $500 billion NEOM megaproject is set to transform the Kingdom’s northwest Red Sea coast to a high-tech hub.

Topics: NEOM NEOM airlines Saudi aviation

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