Sabic's Q2 profit plunges 85% on lower sales volume, price

Saudi Basic Industries Corp (Sabic), one of the leading global petrochemical companies, today (August 3) reported a 85% plunge in its net profit for the second quarter which fell to SR1.18 billion (USD315 million) from SR7.9 billion (USD2.1 billion) last year mainly due to lower average sales prices, said the company.

The net profit beat analysts’ mean estimate of SR1.05 billion, according to data compiler Refinitiv.

Announcing its results for the three-month period ended June 30, 2023, Sabic said the group's average selling prices fell by 26%, while sales volumes were 4% lower due to scheduled maintenance activities.

"The global economy is continuously slowing down as a result of tightening monetary policies to confront inflation, leading to weaker demand and a decrease in the average selling prices of the company’s products as well as lower quantities sold," stated Sabic in its filing to the Saudi bourse Tadawul.

As a result, there was a sharp decline in gross profit and earnings before interest and taxes (EBIT) despite lower feedstock cost and lower selling and distribution expenses, it stated.

Sabic’s share in results of non-integral joint ventures and associated companies also fell substantially in the second quarter, the company said.

On a quarter-on-quarter basis, Sabic said its ebitda at the petrochemicals & specialties operations rose by 8% to SR4.27 billion in the April-June period because of lower feedstock prices. Revenue was down by 7% at SR31.6 billion on lower sales volumes and prices.

The petrochemical giant said monoethylene glycol (MEG) prices fell by 10% quarter on quarter during the April-June period “as a result of higher supply and new capacities, despite improvement in the polyester demand in China.”

The polyethylene (PE) global prices declined by 7% quarter on quarter in the April-June period, weighed by low demand from downstream sectors while increased capacity from US and China, it added.

We remind, Aramco, TotalEnergies, and SABIC have converted oil derived from plastic waste into ISCC+ certified circular polymers in the hopes of creating a domestic value chain for the advanced recycling of plastics into circular polymers in Saudi Arabia.

mrchub.com

Saudi Aramco's CEO Amin Nasser said on Monday that the company's supplies to customers remain adequate even with recent voluntary oil production cuts by the kingdom, adding that global demand remained resilient despite economic headwinds, said Hydrocarbonprocessing.

Saudi Arabia last week decided to extend a voluntary oil output cut of one million barrels per day for another month to include September and said it could be extended beyond that or even deepened. "We still have adequate supply to satisfy our customers," Nasser said on Monday.

Oil futures are now at their highest since mid-April after Saudi Arabia and Russia pledged to keep supplies down for another month to tighten global markets further. Brent was trading around USD86 a barrel on Monday.

Aramco reported on Monday a near 38% drop in second-quarter net profit on the back of weaker oil prices and thinner refining and chemicals margins.

Despite the economic challenges, Aramco has seen positive signals that global demand remains resilient and that Chinese demand will continue to grow, Nasser told reporters on a media call.

"There is still a lot of mileage for China and the economy (to pick) up," he said, adding that the aviation sector was at 85% compared to pre-pandemic levels, indicating room for growth. On the Durra shared offshore field with Kuwait, Nasser said plans were going ahead.

"Durra field is going as planned with the Kuwaitis, (with) no issue at this stage in terms of... the engineering and development," he said. Saudi Arabia and Kuwait claim exclusive joint rights to the field. Iran also claims a stake and says a Saudi-Kuwaiti agreement to develop it that was signed last year is illegal.

Both countries renewed calls for Iran to negotiate on the demarcation of the eastern border of the Gulf's maritime "Divided Area" last week. They say they want to negotiate with Iran together.

We remind, Aramco, one of the world’s leading integrated energy and chemicals companies, has successfully closed a landmark transaction to acquire a 10% interest in Rongsheng Petrochemical Co. Ltd. for USD3.4 B through its subsidiary Aramco Overseas Company BV, based in the Netherlands.

mrchub.com

Origin Materials, Inc., the world’s leading carbon negative materials company with a mission to enable the world’s transition to sustainable materials, and Terphane, part of Tredegar Corporatio, a global leader in specialty PET polyester films (“BOPET”), announced today a strategic partnership to produce sustainable, high-performance bio-polymer films, said the company.

As part of the partnership, Terphane signed a multi-year capacity reservation agreement to purchase the advanced bio-polymer PEF for use in film applications, including food and beverage packaging and high-value industrial applications. BOPEF is biaxially oriented PEF, and BOPET is biaxially oriented PET. These stretched polymer films are valued for their strength, transparency, barrier properties, and electrical insulation.

“We are pleased to partner with Terphane, a trusted global leader in films with expansive customer and partner relationships,” said Rich Riley, Co-CEO of Origin Materials. “We are thrilled to work together to develop advanced, performance-enhanced products that help to enable a net zero material economy. This partnership represents further progress in Origin’s mission to enable the world’s transition to sustainable materials.”

According to Marcos Vieira, global director of R&D for Terphane, “The development of this film will be critical to our efforts to meet this new global demand for sustainable flexible packaging solutions. The film is partially made from PEF and has all the traditional properties of a regular PET film, including post-consumption recycling. In addition, PEF provides an excellent thermal resistance and superior barrier performance, extending the shelf life of the packaged products.” Vieira adds that initial tests in the U.S. proved the material works perfectly in extrusion lines.

Origin Materials’ patented technology platform represents a potential breakthrough in the commercialization of cost-competitive and low-carbon PEF. Made from furandicarboxylic acid (“FDCA”), the primary precursor to PEF, Origin PEF is a polymer with an attractive combination of sustainability and performance characteristics for packaging including enhanced barrier properties. Origin’s PEF is expected to be 100% plant-based, fully recyclable, have attractive unit economics, and to offer a significantly reduced carbon footprint, with superior strength, thermal properties, and barrier properties compared to today’s widely used petroleum-based materials.

We remind, Origin Materials, a leading carbon negative materials company with a mission to enable the world’s transition to sustainable materials, and Husky Technologies, a pioneering technology provider enabling the delivery of essential needs to the global community, announced a milestone in the commercialization of PET (polyethylene terephthalate) incorporating the sustainable chemical FDCA (furandicarboxylic acid) for advanced packaging and other applications.

mrchub.com

LyondellBasell Industries has announced its financial results for the second quarter of 2023, said the company.

The company reported a net income of $715 million, equivalent to $2.18 per diluted share. This figure excludes identified items of $86 million, which impacted earnings by $0.26 per share. The company’s EBITDA for the quarter was $1.4 billion, or $1.5 billion excluding identified items.

During the second quarter, LyondellBasell’s global olefins and polyolefins margins experienced modest improvement due to lower feedstock costs in the U.S. and Europe. However, this increase was partially offset by planned maintenance at the company’s existing assets. Despite a decline from previous highs, refining margins remained above long-term averages.

The company generated $1.3 billion in cash from operating activities during the quarter, with a cash conversion rate of 103% over the last twelve months. LyondellBasell’s available liquidity at the end of the quarter was $6.6 billion. The company reinvested $300 million in the business and returned $508 million to shareholders through dividends and share repurchases.

LyondellBasell’s Value Enhancement Program is progressing ahead of schedule, leading to an increase in the program’s near-term target. The program now aims to deliver $150 million of net income and $200 million of recurring annual EBITDA by the end of 2023. Additionally, the company has extended its refining operations until at least the first quarter of 2025 as part of its sustainable growth strategy.

Despite ongoing economic uncertainty and soft demand, LyondellBasell remains committed to its long-term strategy. The company expects average operating rates of 85% for North American olefins and polyolefins assets and 75% for European assets in the third quarter, in line with global market demand.

We remind, Lyondell Basell Industries said on Wednesday that it plans to delay its refining business exit from year-end 2023 to no later than the end of the first quarter 2025. The company said in April it would close its Houston refinery by the end of 2023 after two failed attempts to sell the plant, and the closing of Lyondell's five U.S. refineries in the past two years.

mrchub.com

Trinseo, a specialty material solutions provider, and its affiliate companies in Europe announced today a price increase for all polystyrene (PS), ABS and SAN grades, said the company.

Effective August 1, 2023, or as existing contract terms allow, the prices for the products listed below will increase as follows:

STYRON™ and STYRON™ X-TECH general purpose polystyrene grades (GPPS) by +125 Euro per metric ton
STYRON™ and STYRON™ A-TECH, STYRON™ C-TECH and STYRON™ X- TECH high impact polystyrene grades (HIPS) by +125 Euro per metric ton
MAGNUM™ ABS resins by +55 Euro per metric ton
TYRIL™ SAN resins by +85 Euro per metric ton

We remind, Trinseo, a specialty material solutions provider, announced the inauguration of its polycarbonate (PC) dissolution pilot facility in Terneuzen, the Netherlands. The new pilot facility is a major step in Trinseo’s commitment to sustainability, part of the journey in realizing the company’s sustainability goals. The guests of honor at the inauguration ceremony included Jo-Annes de Bat, Provincial Executive (responsible for regional economy) of the Netherlands.

Trinseo, a specialty material solutions provider, partners with companies to bring ideas to life in an imaginative, smart and sustainably focused manner by combining its premier expertise, forward-looking innovations and best-in-class materials to unlock value for companies and consumers.

mrchub.com