SABIC expects Q4 margins to be 'under pressure' after drop in prices

SABIC, the petrochemical company majority owned by Saudi Aramco, expects margins to be "under pressure" in the four quarter after posting a 4% drop in Q3 petrochemical prices on the year.

Third quarter sales rose 11% on the year while net profit plunged 67% to Riyals 1.84 billion ($490 million), SABIC said in an earnings statement posted Oct. 30 on the Saudi stock exchange website where its shares are traded.

For the first nine months of 2022, average sales prices rose by 15% and sales volumes increased by 11% from the year-earlier period.

"We expect margins to be under pressure in the Q4 of 2022," SABIC said, without elaborating. It didn't disclose volumes or production figures for the third quarter.

Saudi Aramco, which owns 70% of SABIC, is due to disclose its Q3 results on Nov. 1.

SABIC's petrochemicals division saw average sales prices increase by 12% and sales volumes rise by 9% in the first nine months of 2022 from the year-earlier period.

New Jubail plant

Agrinutrients had average sales prices increase by 83% and sales volumes rise by 15% in the first nine months of 2022 from a year-earlier period.

In the first nine months of 2022, SABIC's Hadeed subsidiary had sales prices increase by 6% and sales volumes rise by 19% from the year earlier period.

SABIC announced on Oct. 17 the start of commercial operations of its third ethylene glycols plant at the kingdom's Jubail petrochemicals hub.

The annual production capacity is 700,000 mt of monoethylene glycol.

The plant is the third ethylene glycol plant in the subsidiary Jubail United Petrochemicals. As of 2021, SABIC had capacity to produce 4.64 million mt/year of monoethylene glycol, according to S&P Global Commodity Insights data.

The plant is expected to be included in its fourth-quarter 2022.