SABIC cuts 2025 GDP forecast with petchems still facing 'market challenges'

Saudi Arabia's SABIC petrochemicals producer lowered its 2025 GDP growth forecast as the petrochemicals market continues to face "market challenges" including tariff talks started by the US that threaten global trade.

First-quarter revenue rose 5.8% from a year earlier to Riyal 34.59 billion ($9.22 billion) due to an increase in tonnage sold despite lower average selling prices and "market challenges," the company said in a May 4 earnings statement. A one-time expense of Riyal 1.07 billion ($290 million) was taken in the first quarter for a "strategic restructuring," resulting in a net loss of Riyal 1.2 billion.

Petrochemicals have faced years of oversupply and falling prices, and slowing economic growth will only add to the industry's woes as petrochemicals demand is closely connected to GDP growth. SABIC lowered its 2025 GDP growth to 2.2% from 2.5% forecast in February.

"Undoubtedly, the current tariffs have a significant impact on the global economic process," CEO Abdulrahman al-Fageeh said at a press conference. "Restructuring is usually done on an ongoing basis, but this time it was on a larger scale, so that its positive impact on the company would be greater. It is expected that the restructuring will be completed during this year."

The amount of savings, now estimated at Riyal 345 million/year, will be further discussed in the third quarter, Saleh al-Hareky, EVP for corporate finance, said at the press conference.

"Sales performance was stable, supported by slightly higher production volumes in chemicals and polymers, although overall sales volumes were marginally lower, particularly in agri-nutrients and polymers," the company said in the statement.

SABIC has earmarked $3.5 billion-$4 billion for capital investment in 2025, unchanged from February, and said the $6.4 billion Fujian petrochemical complex in China is progressing according to plan, along with the Petrokemya MTBE plant.

Fujian project

The final investment decision on Fujian was announced in January 2024, and the startup is expected in the second half of 2026. SABIC also said it has started the Ibn Zahr LTRS-1 project, "which aims to enhance the utilization of feedstock and reduce the carbon footprint."

All end uses for petrochemicals are stable from the fourth quarter and from a year earlier, except for industrial, electrical/electronics and hygiene/health care sectors which "improved" from the fourth quarter, the company said in a presentation. Packaging and building/construction make up its biggest markets.

As to individual petrochemicals, mono ethylene glycol faces higher supply and "weak demand" while methanol is supported by "tight supply and natural gas shortages," it said. MTBE faces "reasonable" regional demand in Europe and a seasonal blending demand recovery.

As for polymers, polyethylene is supported by global demand but "challenged by additional supply," it said. Polypropylene is under pressure from too much supply and "weak demand" while polycarbonate has "weak demand across major markets and oversupply."