Saudi's Tasnee expects higher global petrochemical prices in 2020

Saudi Arabia's second largest industrial company expects global petrochemical prices to rise in 2020 after taking a hit this year from the trade war between the United States and China, its chief executive told Reuters.

National Industrialization Co (Tasnee), with interests in petrochemicals, metals and chemicals, is one of the world's largest producers of titanium dioxide, which is used in products such as paints, industrial coatings and plastic.

"This year is not going to be an easy year. Petrochemical prices have been depressed, all commodities prices in general are down," Mutlaq Al-Morished said in an interview.

"I think in 2020 we should see improvement, assuming there will be some sort of agreement between the Americans and the Chinese. But even if there is trade war, we have seen the shock already and markets have already discounted it."

The year-long, tit-for-tat trade dispute between Washington and Beijing has roiled financial markets, cast a long shadow over the global economy and stifled demand for chemical products.

Tasnee's second quarter net profit fell 25 percent to SAR 296.7 million ($79.1 million) due to a drop in the average selling prices of petrochemical and titanium dioxide products.

Morished said that despite a generally negative mood, demand had not been significantly affected: "We don't have a problem moving the tonnage. We are selling everything, it is the price that we don't like."

In April, Tasnee subsidiary Cristal sold its domestic and international titanium dioxide business to chemical maker Tronox Ltd for $1.67 billion cash and a 24 percent equity position in Tronox.

Morished said the deal was a move to pay down debt and ruled out similar steps going forward.

Tasnee is one of 30 Saudi-listed companies included in the MSCI emerging markets index. The Saudi stock exchange, Tadawul, completed the process of joining the MSCI EM Index in August.

Morished said that was positive for Tasnee shares, as it would increase the institutional investor base and help limit share fluctuations.

"It will give you people who don't play with share prices like gambling or the people who go on rumors. Institutional investors stay with the company for a long time," he said.